Corporate update
On 5 November 2019, the Company's subsidiary and owner of the group's UK operations, Mothercare UK Limited (in administration) ("MUK"), entered administration. An agreement was reached with the administrators of MUK to assign the Mothercare brand and novate the majority of the group's international franchise agreements to a new legal entity and subsidiary of the Company, Mothercare Global Brand Limited ("MGB"), alongside certain assets and liabilities, including all liabilities in respect of the group's defined benefit schemes.
The administration of MUK and transfer of the international franchise business to MGB completed the transformation of the group into a capital light business which is expected to be both cash generative and profitable, focused in its global international franchise arrangements. With the conclusion of the administration process, the group is a focused international brand operator with no directly operated stores and greatly reduced direct costs.
In addition, in November 2019, as part of its restructuring, the Company strengthened its financial position which ensured that Mothercare is in a position to complete the restructuring and return to a viable future. The core elements of that stage of refinancing in November 2019 were as follows:
a) new equity of £3.2 million before expenses raised via a placing of 32,359,450 Ordinary shares of 1 pence each at a price of 10 pence per share from existing shareholders;
b) the issuance of £5.5 million in convertible unsecured loan notes on substantially the same terms as the convertible loan stock issued in May 2018, with the exception of the conversion price of 10 pence per share in this instance;
c) a standby underwriting agreement with Numis for the provision of a standby underwriting commitment in respect of a further equity capital raising of up to £20 million;
d) the total principal sums outstanding under the group's senior debt facilities at that point stood at £24 million, and it is expected that all amounts due under the senior debt facilities will be paid in full out of the stock liquidation process undertaken by Gordon Brothers as part of the administration of MUK;
e) Gordon Brothers also provided the Company with a term sheet for a new £15 million secured term loan facility;
f) Mothercare's debtor backed facility from one of MGB's trade partners is available to the group; and
g) agreement was reached with the pension trustees to a reduction in the planned contributions over the18 months from 5 November 2019.
The directors expect that Mothercare will be a simplified, profitable and cash generative business. The group will remain one of the leading specialist brands for parents and young children focused on global product design, sourcing and marketing to support the franchise partners in over 40 territories and over 800 stores around the globe.
On 13 December 2019, we announced that MGB had entered into binding heads of terms with Boots UK Limited as its new exclusive franchise partner of the Mothercare brand for the UK.
On 17 October 2024 we announced a new c£30 million joint venture for the South Asian region with Reliance Brands Ltd ("Reliance") and a related refinancing with GB Europe Management Services Ltd ("Gordon Brothers") of the Company's existing debt facilities.
