UK-based mother and baby products retailer, Mothercare, is planning to shut 49 stores in the UK by June 2019, according to reports.
The company has taken this decision following the approval of the company voluntary arrangement (CVA) proposals from its creditors. It will result in the loss of around 800 jobs, reported The Guardian.
The company’s independent creditors, including landlords and suppliers, approved the CVA, which allows it to close unprofitable stores and reduce rents.
Mothercare also proposed to reduce 65% rent on 49 stores to be closed and 50% rent for 21 more stores.
Mothercare interim executive chairman Clive Whiley was quoted by the news website as saying: “The deal was a crucial step forward to achieve the renewed and stable financial structure for the business that will drive an acceleration of Mothercare’s transformation.”
“We are very grateful for the support of our many stakeholders across our creditor base in supporting today’s CVA proposals.
“Their forbearance and support today is a crucial step forward to achieve the renewed and stable financial structure for the business that will drive an acceleration of Mothercare’s transformation.
“These measures provide a solid platform from which to reposition the group and begin to focus on growth, both in the UK and internationally.”
Following this, the company plans to raise £28m from shareholders to support its ongoing business efforts.
The CVA proposal was filed by UK-based KPMG on behalf of the retailer.
KPMG restructuring partner and joint supervisor of the CVA said: “The approval of these CVAs is a critical component in management’s plans to create a fully refinanced, restructured business that is better-equipped to move forward in today’s dynamic omnichannel retail environment.
“As with all CVAs, more than 75% of creditors had to vote in favour in order to pass the resolution. Today’s vote saw the significant majority of all voting creditors choose to approve the proposals.”