- Mothercare has revealed measures to refinance its business and restructure its UK store portfolio through company voluntary arrangements (CVAs) of certain subsidiaries.

The measures aim to return Mothercare to a more stable footing, accelerate the transformation of the group and drive it towards a viable and sustainable future.

Mothercare's refinancing will provide funding of up to £113.5m, comprising a proposed equity capital raising of £28m expected to be launched in July 2018; revised committed debt facilities of £67.5m; new £8m shareholder loans; and a new debtor backed facility of up to £10m from one of the company's trade partners.

The shareholder loans and the trade partner loan will provide immediate access to up to £18m of additional liquidity.

The UK restructuring is expected to result in a resized store estate with 50 stores to be exited, and material rent reductions on a further 21 stores; a stabilised financial performance through cost savings and/or eliminated losses; at least £10m cash inflow from store closures and working capital initiatives; further cost savings of at least £5m as the business is right sized; and a total store portfolio of 78 stores by FY20 from 137 stores today.

Clive Whiley, the company's interim executive chairman, said: "‎The recent financial performance of the business, impacted in particular by a large number of legacy loss making stores within the UK estate, has resulted in an unsustainable situation for the Mothercare brand, meaning the group was in clear need of an appropriate resolution. Since my appointment as interim executive chairman, my priority has been to galvanise support from all of our stakeholders and provide a solution to the short-term problems facing the company.

"‎These comprehensive measures provide a renewed and stable financial structure for the business and will drive a step change in Mothercare's transformation. The potential for the Mothercare brand in the UK, benefitting from a restructured store estate, and internationally remains significant. However, there remains much to do and we must maintain a disciplined focus on cost control and cash generation throughout the business, but these measures provide a solid platform from which to reposition the group and begin to focus on growth, both in the UK and internationally."

At 8:50am: [LON:MTC] Mothercare PLC share price was +6.5p at 27.8p

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