Mothercare plc (LON:MTC) saw its shares drop almost 5% on Monday after the struggling child and babycare retailer confirmed it is planning an equity issue as part of a restructuring and refinancing package.
In a brief statement, the FTSE SmallCap firm said: “In light of recent speculation and further to the announcement of 2 March 2018, Mothercare plc announces that it is now finalising a comprehensive restructuring and refinancing package to put the business on a stable and sustainable financial footing.”
READ: Mothercare sales still falling as debt talks continue
The group added: ““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 which we intend to announce with our final results, which are expected to be published on 17 May 2018.”
It added that a further announcement will be made in due course. In late morning trading, Mothercare shares were 4.9% lower at 19p.
The reorganisation is likely to be a company voluntary arrangement (CVA), which typically results in retailers closing stores and renegotiating rents, in return for fresh financing.
In an update in April, Mothercare said dialogue with its financiers had been constructive and it was looking at alternative sources of funding.
New chief executive David Wood – who joined that same month - was reportedly said to be planning to cut a third of the outlets after a poor Christmas sparked a funding crisis.