Mothercare plc (LON:MTC) provided some small relief for hard-pressed shareholders on Wednesday by confirming that discussions with its lenders on the terms of its existing financial facilities are “progressing constructively” and financial covenant tests have been deferred.
In early morning trading, Mothercare shares were 8.3% higher at 17p.
In an update, the mother and baby products retailer said that, further to its announcement of refinancing talks on 2 March 2018, it expects those discussions to conclude before 17 May 2018, the scheduled date for the announcement of its preliminary results.
Accordingly, it added that Mothercare's lenders have agreed to defer the testing of its financial covenants due on 24 March 2018.
As previously indicated, the high street firm added, it is 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.”
The group said that it will make further announcements “as and when appropriate.”
Mothercare shares took a dive on Monday on a read-across after the Sunday Times reported that struggling fellow retailer Carpetright PLC (LON:CPR) could go down the route of a company voluntary arrangement (CVA) as part of a rescue plan.
The group warned on March 2 that its full-year profit would be at the low end of reduced guidance, but said trading was in-line with the expectations it set out in January after then revealing a disappointing Christmas performance when its UK performance was particularly weak.
The high street has been blighted by a wave of retail collapses in the past month, with Toys R Us announcing it would close all of its UK stores after the US firm collapsed into administration in February, and privately-owned electronics retailer Maplin also going bust.
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