LONDON: Britain's Mothercare, the struggling mother and baby products retailer, said on Thursday it would close 50 more stores as part of a survival plan that would also see it ask shareholders for 28 million pounds ($38 million) in an equity raise.The firm also said Mark Newton-Jones had agreed to return as chief executive following his abrupt departure just five weeks ago.
Mothercare's sales and profit have been hammered by intense competition from supermarket groups and online retailers in its main UK market as well as by rising costs. Its shares have lost 83 percent of their value over the last year.
The firm said it would seek creditor approval for company voluntary arrangement (CVA) proposals that would enable it to shut 50 stores and secure rent reductions on 21 others.
Mothercare currently trades from 137 UK stores, having had nearly 400 a decade ago. The new plan would see it trade from 73 UK stores by 2022.
In addition to the proposed equity issue the firm has also secured revised committed debt facilities of 67.5 million pounds, 8 million pounds of new shareholder loans and a new debtor backed facility of up to 10 million pounds from a trade partner.
Mothercare shares closed on Wednesday at 21.3 pence, valuing the business at just 36.5 million pounds.
The CVA route, which allows firms to avoid insolvency or administration, has already been taken this year by fellow UK retail laggards - fashion chain New Look, floor coverings group Carpetright and department store group House of Fraser. ($1 = 0.7384 pounds)