Shares in Mothercare were up more than 12% this morning (21 March) following news the lenders of the UK mother, baby and children’s goods retailer have agreed to defer a testing of its financial covenants.
The announcement comes nearly three weeks after Mothercare warned it may breach its lending agreements and expects full-year profits to be at the lower end of its guidance.
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Mothercare in talks with banks amid profit warning
In a statement on 2 March, the retailer said it expects its borrowings to increase towards the limit of its total committed and non-committed facilities at various points from the start of the new financial year, and would, therefore, require waivers of certain financial covenants.
Now, Mothercare says the discussions with its lenders on the terms of its existing financial facilities are “progressing constructively”, and are expected to conclude before 17 May; the scheduled date for the announcement of its preliminary results.
The retailer is also exploring additional sources of financing to support and maintain the momentum of its transformation programme and says it is engaged in preliminary discussions on securing such additional financing.
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By GlobalData
