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Bloomberg
Mothercare Plc has started talks with its lenders seeking a reprieve on debt terms amid challenging market conditions that have left it needing to borrow more.
The UK-based childrenswear retailer will need to draw on existing debt facilities up to their limits while it seeks new financing in the next financial year, it said in
a statement.
HSBC Holdings Plc and Barclays Bank Plc refinanced Mothercare’s credit lines in May 2017 with a $86 million revolving credit facility that starts maturing in November. The company also has a
5 million-pound uncommitted line and can draw up to 75 million pounds after approval from the lenders, it said in its 2017 annual report.
The UK’s retailers are facing a relentless competitive squeeze from the shift to online shopping as well as Brexit-induced weakness of the pound that’s boosting their costs while depressing consumer spending power. Earlier this week, Carpetright Plc issued a profit warning, while Maplin Electronics Ltd. and the local arm of Toys ‘R’ Us Inc. both filed for insolvency.
Mothercare also said that its adjusted profit before tax will be at the lower end of guidance between 1 million pounds to 5 million pounds. Mothercare shares dropped 16 percent.