Mothercare subsidiary fails to win CVA support but group's plan will still go ahead
Mothercare may be forced to make deeper cuts to its business than it had planned after it emerged that its subsidiary Children's World, which operates 21 of its stores, did not receive sufficient support from its creditors for its proposed CVA (Company Voluntary Arrangement).
The baby and maternity retailer confirmed on Friday that the group had received sufficient support for its CVA proposal that would result in 50 store closures over the next three years (leaving it with around 80 stores). However following a recount of votes it has emerged that Children's World only secured 73% approval for its plan, 2% short of the 75% required.
Mothercare, however, has said that its group CVA met with unanimous support and this latest revelation will not affect its group plans which include an injection of £28m through a share placement and a new £67.5m revised debt facility.
Interim executive chairman Clive Whiley said: "KPMG have confirmed the votes relating to MUK and ELC CVA's passed by a clear majority; however it is now clear that the CVA of Childrens World was not carried by creditors by a narrow margin.
"This will neither unsettle the UK restructuring and refinancing nor jeopardise our future transformation plans, which are already underway. As a board we are now considering our next steps with respect to Childrens World."