Mothercare has secured £8m refinancing and revealed a new joint venture.
- The refinancing deal is with Gordon Brothers, reducing debts significantly.
- A joint venture with Reliance Brands covers South Asian markets.
- Reliance Brands holds a 51% stake in the new joint venture company.
- Mothercare aims for growth and reduced financial burden with this restructuring.
Mothercare has successfully secured debt facilities amounting to £8 million with Gordon Brothers as part of its strategic financial restructuring efforts. This move is seen as a significant step towards reducing its existing debts and paving the way for future financial stability.
Complementing this development, Mothercare has established a new joint venture in collaboration with Reliance Brands. This partnership entails a £16 million investment from Reliance Brands, granting them a 51% stake in a joint venture company. This company is set to operate in several South Asian markets including India, Nepal, Sri Lanka, Bhutan, and Bangladesh.
The joint venture structure is designed to replace the previous franchise arrangement that exclusively covered India. Mothercare retains a 49% share in this new joint venture, which includes ownership of the Mothercare brand and related intellectual property across these regions.
The revised financial and operational framework is expected to catalyse Mothercare’s growth trajectory, with potential revenue expansion anticipated to surpass previous levels. Notably, under the earlier franchise agreements, Mothercare had reported a revenue contribution of approximately £0.9 million from India to its adjusted EBITDA for FY24.
The strategic refinancing has led to a transformation of financial commitments with a significant reduction in interest costs. The prior £19.5 million term loan bearing an interest rate of 13% per annum has been substituted with an £8 million loan featuring a markedly reduced interest rate of 4.8% per annum.
Clive Whiley, the Chair of Mothercare, remarked on the strengthening of operations in South Asia facilitated by these agreements and highlighted the substantial reduction in bank facilities and financial leverage as instrumental to future growth and operational flexibility.
The restructuring positions Mothercare for sustainable growth and financial resilience in its targeted markets.
