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Mothercare rallies as it gets breathing space from lenders
Shares in Mothercare rallied on Wednesday as the baby and toddler chain got some much-needed breathing space after its lenders agreed to defer the testing of its financial covenants due on 24 March.
The company, which issued a profit warning in January after a poor Christmas and said earlier this month that it needed waivers from its lenders, said discussions with lenders on the terms of its existing financial facilities are progressing "constructively".
Mothercare expects the discussions to conclude before 17 May, which is the date of its preliminary results, and said its lenders have agreed to defer the testing of its financial covenants.
"As previously indicated, we are also exploring additional sources of financing to support and maintain the momentum of our transformation programme and we are engaged in preliminary discussions on securing such additional financing," it said.
Mothercare shares tanked earlier this week on news that Carpetright was looking at closing stores and cutting jobs in a bid to avert going into administration. The floor coverings retailer announced earlier on Wednesday that it has secured a £12.5m emergency loan from one of its biggest shareholders, along with plans for a cash call and a company voluntary arrangement to cut rents and close stores.
At 0940 GMT, Mothercare shares were up 12% to 17.59p.