Tuesday, July 10, 2018

News: CVA failure confirms Rotherham Mothercare closure

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The Rotherham Mothercare store is set to close as part of the refinancing and restructuring plans put in place to save the national retailer.

Rothbiz reported in May on how the struggling firm was hoping to secure its future by implementing a company voluntary arrangement (CVA) to close underperforming stores and reduce rents across the remaining portfolio.

Whilst a CVA was completed for Mothercare UK Limited and ELC Limited last week, a CVA could not be completed for subsidiary Childrens World Limited - and that is the nail in the coffin for the Rotherham store.

Mothercare bought Children's World in 1996 and this included the large unit (complete with entrance slide) at Parkgate Shopping in Rotherham. Converted first to Mothercare World, in 2013 it became the brand's first outlet store in the UK. In 2015 the unit was subdivided and fellow retailer Smyths Toys took 15,000 sq ft of space.

Childrens World Limited, which is responsible for the Parkgate store, has now been placed in administration and Mothercare has announced that it will close a total of 60 UK stores by next June 2019.

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The company is hoping to raise capital through an equity issue and also revise debt facilities. It said that its initiatives have identified cost savings totalling £19m together with £10m cash realisation from the store restructuring.

Clive Whiley, interim executive chairman at Mothercare, said: "When I joined the business just three months ago, Mothercare faced a bleak future with growing and pressing financial stresses upon the business. We have worked tirelessly as a team to get to where we are today and this fully underwritten equity issue marks the end of this initial phase, returning the Group to financial stability. This could not have happened without the support of all of our stakeholders for which we are very grateful.

"Alongside the fundraising, we have been very busy on numerous fronts to restructure the Group for future profitability. Whilst the lack of full approval for the Childrens World CVA was disappointing, we have now found a solution which allows us to go further and faster with the right-sizing of our store portfolio. We have also identified significant areas for further efficiencies and cost savings, which will underpin our return to a sustainable future."

75% approval from unsecured creditors is needed to complete a CVA. Childrens World Ltd gained 73.3%. Mothercare said that it will temporarily occupy, under a licence, nine Children's World stores due to be closed "in order to ensure they are closed down in an orderly fashion."

Mothercare website

Images: Google Maps

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