NEWS

New Mothercare CEO expected to announce CVA on Thursday

Published on: 14th May 2018

Britain’s pensions lifeboat has drafted in advisers to prepare for a rescue‎ financial restructuring at Mothercare.

Analysts forecast the group will post a 95% fall in underlying pre-tax profits to just £1m in the year to March on Thursday. The figure compares with a profit of £19.7m last year.

It will come alongside an update on Mothercare’s refinancing progress, with the retailer expected to announce plans for a company voluntary arrangement (CVA).

According to Sky News, The Pension Protection Fund (PPF) is taking advice from PricewaterhouseCoopers (PwC) ahead of this crucial week for the retailer, as it will ultimately have the largest vote on any CVA proposal.

Since taking the helm in April, David Wood – who joined from US grocery and pharmaceuticals giant Kmart – has said his “immediate priority” is to ensure Mothercare returns to firmer financial ground.

A CVA proposal would inevitably involve some store closures and job losses, adding to the growing sense of ‎pessimism about the future of Britain’s high streets.

Mothercare said earlier this year that it was in danger of breaching borrowing agreements with its lenders, and indicated that its results announcement was a critical juncture at which it would need to spell out a survival plan.

Alongside the CVA, Mothercare is expected to have secured financial support from suppliers and lenders.

A Mothercare spokesperson said:‎ “Mothercare continues to explore a number of options in relation to the group’s financing which will allow us to support and maintain the momentum of our transformation programme. As previously stated, we remain in constructive dialogue with our financing partners and further updates will be given as appropriate.”

The PPF declined to comment specifically on Mothercare but said in a statement that it “provides a valuable safety net for pension scheme members if an employer does go bust”.

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