Nursery and maternity retailer Mothercare has called in accountancy giants KPMG to advise on a refinancing of the business.
The company’s share prices saw a slight recovery after it drafted in the accounting firm to help it help it negotiate waivers on its loan agreements (with HSBC and Barclays) and secure the funds needed to avoid falling into liquidation.
The news comes shortly after the announcement earlier this month when Mothercare announced it was entering into rescue talks with banks, following a warning that profits would be at the lower end of expectations.
A spokeswoman said the decision to go to the lenders reflected a challenging trading environment on the high street and seasonal changes to the firm’s cash levels.
“We are also exploring additional sources of financing to support and maintain our transformation programme,” she added. “All of these discussions are ongoing and we will update the market on developments as required.”
A formal statement issued by Mothercare said that it expects those discussions to conclude before 17 May 2018 (when its preliminary results should be announced) and that its lenders have agreed to defer the testing of the financial covenants due on 24 March 2018 accordingly.
The company also confirmed that current trading difficulties would not impair the opening of the new store at the Treliske Retail Park in Truro, Cornwall, which will be opening on 24 May. The new store will create 20 new jobs and will feature the new digitally enabled Mothercare club format.