Mothercare has revealed it has commenced discussions with its lender to refinance its debt facility amid higher interest rates.
As a result, the baby products retailer is seeking various financing alternatives, including equity and equity linked structures, to help to reduce cash financing costs and offer additional flexibility.
However, the company revealed higher interest rates on its loan, alongside a delay in return to pre-Covid sales levels, means the group may need waivers to future periods’ covenant tests.
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This comes as the company reported at the end of its financial year ended 25 March, it had total cash of £7.2 million, compared with £9.2 million in the same period last year, reflecting ongoing tight control of cash.
However, it now expects an adjusted EBITDA of £6.5 million to £7 million, ahead of analysts expectations.
“Once again our results demonstrate the resilience we have introduced to the business over recent years, where we continue to generate both profit and cash,” Mothercare chairman Clive Whiley said.
“This would not have been possible without the support of all of our colleagues, franchisees and manufacturing partners whom I would like to thank on behalf of the board.
“Although our immediate priority remains to support our franchise partners as they emerge from a period of suppressed demand, ultimately for the benefit of our own business, we have also redoubled our efforts to restore critical mass.”
He added: “Accordingly we are engaged in discussions to drive the Mothercare brand globally by widening the bandwidth of our product offering, alongside penetration into new territories via a variety of routes to market.”
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