Mothercare close to rescue plan that will speed store closures.

Mothercare are close to agreeing the plan of salvation, which involves the collection of new funds from investors and accelerate the closure of stores.

The struggling childrenswear and maternity retailer said it was finalising a comprehensive restructuring and refinancing package to put the business on a stable and sustainable financial footing.

“We are in the final stages of detailing these restructuring plans alongside new committed debt facilities, an underwritten equity issue and access to other sources of capital,” it said.

The firm’s new chief executive, David Wood, who was parachuted into the job last month and previously ran US department store group Kmart, will provide further details on Thursday alongside the group’s full-year results.

Mothercare issued a profit warning in January following disappointing sales over Christmas. It slashed its profit forecast to £1m to £5m for the year to the end of March. City analysts are expecting profits to crash to £1m from £19.7m last year.

Mothercare shares fell by almost 10% to 18.09p in early trading on Monday as the company confirmed it would tap shareholders for cash.

Like other household names on the high street, the company has been battling weak consumer spending and a shift to online shopping, as well as increasing competition in the toy and kidswear market. Toys R Us and Maplin are among the chains that have gone into administration, with the loss of thousands of jobs.

Shoppers are deserting the high street in greater numbers than during the depths of the recession in 2009, the latest footfall figures from the British Retail Consortium and Springboard suggest. They tallied with a 2% drop in consumer spending last month, according to Visa’s consumer spending index, which has recorded declines in 11 of the past 12 months.

Mothercare, which has an £80m hole in its pension pot, has been in discussions with its lenders, Barclays and HSBC, since March, when it revealed it was on course to breach the terms of its bank loans and needed extra cash to fund an overhaul of the business.

The company is also expected to announce a company voluntary arrangement (CVA), a form of insolvency used to close unprofitable stores and drive down rents, to speed up store closures.

Mothercare started shutting stores four years ago and has reduced its UK portfolio from 220 to 137, with a target of 80-100 as sales move online. It is also refurbishing remaining outlets.

Britain’s biggest carpet retailer Carpetright is also using a CVA to close 92 stores – with the potential loss of 300 jobs – and negotiate rent reductions of up to 50% with landlords.

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