- Vivian Hendriksz |
A mistake made during the counting of votes on whether or not Mothercare plc should go ahead with plans for a company voluntary arrangement (CVA) has not put its refinancing scheme at risk, stated the retailer on Monday.
The struggling maternity and babywear specialist revealed last Friday that creditors had voted in favour of its CVA proposals for Mothercare, Early Learning Centre, and Childrens World Businesses. In order for each CVA to go through, each proposal needs a majority of more than 75 percent in value of the unsecured creditors. While voting for and results for the CVA proposals for Mother and Early Learning Centre passed by clear majorities, the same cannot be said for Mothercare plc's non-core subsidiary Childrens World Limited.
In a statement published to the London Stock Exchange on Monday, Mothercare revealed that the CVA proposals for Childrens World Limited had only been approved by 73.3 percent, just narrowly missing the threshold. The mistake was found after Mothercare's advisers KPMG "scrutinised the voting returns" for the CVA processes before the formal filing at the High Court on Monday, said the company in a statement. Mothercare's CVA proposal for Childrens World Limited will not progress any further, which led to speculation that its refinancing plan may be at risk.
For now, the directors of Mothercare and Childrens World Limited are considering all other options for the subsidiary as a legal entity and a further announcement will be made in due course, added Mothercare. "The CVA Proposals and/or any restructuring of CW are not expected to affect the ordinary course of operations of Mothercare plc, which continues to trade as a going concern under the control of its directors." The CVA plans set to go ahead will see up to 50 Mothercare stores closing their doors by next June.
"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," said Clive Whiley, Interim Executive Chairman, Mothercare. "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."
Photo: Mothercare, Facebook