Mothercare PLC (LSE:MTC) shares fell 18% at 2.62p on Monday after the retailer said it had secured a further delay to its pension payments and confirmed it had breached a key lending covenant.
The company said its pension trustee had agreed to extend the deferral of £3 million in contributions for the year to March 2026, giving the group additional breathing room as it looks to stabilise cash flow and pursue growth opportunities.
Payments are now expected to resume in April 2026 under a new funding schedule.
Mothercare also disclosed that it had breached the liquidity covenant on its £8 million debt facility, technically making the loan repayable on demand.
However, the company said its lender continued to be supportive and had not sought immediate repayment.
The group said the agreement would give it greater flexibility to continue strategic talks aimed at rebuilding its UK presence and addressing its pension deficit.