LONDON (Reuters) - British mother and baby products retailer Mothercare (MTC.L) said on Monday it was making progress with a survival plan and expected to complete a 32.5 million pound ($43.2 million) equity issue this month.
Raising the funds from the placing and open offer of new shares to existing investors would enable the firm to secure 67.5 million pounds in revised debt facilities as part of its May restructuring program.
That plan calls for Mothercare to close more than a third of its UK stores.
Its profit and sales have been hammered by competition from supermarket groups and online retailers in its main UK market as well as by rising costs.
Its shares have fallen 73 percent in the past year.
The stock fell as much as 12.6 percent in early trading on Monday to 25.2 pence, valuing the business at 42.6 million pounds. The new shares are being issued at 19 pence.
Mothercare said current trading was following the patterns seen in the second half of its 2017-18 year, with challenging conditions in the UK and some stability visible in its international operations.
The group is closing stores through the so-called company voluntary arrangement (CVA), allowing it to avoid insolvency.
CVAs for the group’s units, Mothercare UK Limited and ELC Limited, are now effective.
However, as the CVA proposal for the Childrens World Limited unit did not receive creditor approval, it will be placed in administration, and 13 of its 22 stores will transfer to other Mothercare group companies and continue trading.
The group expects to exit 60 UK stores and have a continuing UK store estate of 77 stores by June 2019.
Reporting by James Davey; editing by Sarah Young