City fury after Mothercare renegotiates its banking loans
Baby products retailer Mothercare suffered a City backlash after it emerged that it is renegotiating the terms of its bank loans just seven months after it secured a £90m refinancing facility.
Shares fell by as much as 9% in the wake of the disclosure in the Sunday Times, confirmed by sources. It compounded the dire performance of the stock so far this year which has seen it fall by more than half since January.
But the shares clawed back some losses after the group issued a statement saying it expected to remain within banking covenants.
Mothercare said that, as was regular practice, it was "in regular dialogue with all its financing partners".
It also reiterated that underlying annual pre-tax profits published later this month, predicted by analysts at around £8m, were in line with forecasts, and debt in line with guidance.
"Mothercare is and expects to remain in compliance with the provisions and covenants of its facilities," it added.
"Mothercare continues to discuss with its banks its future plans for the business and the consequential funding requirements, and is grateful to them for their continued support."
The statement came after the Sunday Times said that the group had asked lenders for breathing space after a number of profit warnings and the departure of chief executive Simon Calver.