Struggling baby products retailer Mothercare (LON:MTC) has launched a deeply discounted £100mln rights issue to shore up its finances and pay for a rejuvenation programme.
New shares are priced at 125p and on a nine-for-ten basis will almost double the number of shares Mothercare has in issue.
Shares were changing hands at more than 400p at the start of the year prior to a string of profit warnings largely related to problems in its core UK business as competitors took advantage of its sluggish move online.
Having successfully rebuffed a takeover approach from US firm Destination Maternity in July, new chief executive Mark Newton-Jones has set out a plan of reducing the number of stores and ending aggressive price cutting to boost margins.
Of the £100mln, £25mln has been earmarked for closing stores, £20mln on upgrades for other with an overhaul of its IT infrastructure and paying off debt accounting for the rest of the money raised.
Alan Parker, Mothercare’s chairman, said the fund raising was pivotal for the company and would position it for the next phase of its strategy, which was focused on returning the UK to profitability and reinforcing the strong growth potential in the international operations.
Shares fell 9% to 226p.