(Alliance News) - Retail chain Mothercare PLC on Thursday unveiled a cluster of board changes and warned that debt reduction measures following the administration of its UK unit was "behind expectations".
The seller of products for expectant mothers and infants still said it has made "good progress" in its transformation plan.
Shares in the company were 11% lower at 14.80 pence each in London on Thursday morning.
Mark Newton-Jones steps down as chief executive with immediate effect, but will remain as an executive director until July. Thereafter, Mothercare said he has agreed to "make himself available as a non-executive director".
Glyn Hughes, who served as chief financial officer during the restructuring period, takes over as CEO on an interim basis, also with immediate effect.
Immediately replacing him as CFO is Andrew Cook, who joins the company's board following a spell as Mothercare's corporate development director since April 2019.
"Andrew is a highly-experienced, results-oriented finance executive having successfully transformed business profitability across a number of sectors, including retail. He was most recently chief financial officer for Stanley Gibbons Group PLC." Mothercare said.
Clive Whiley, currently interim executive chair, will become non-executive chair on March 29.
On its transformation, Mothercare said it is "on track" with its planned recapitalisation. It has so far raised GBP8.7 million, GBP3.2 million through an equity issue and GBP5.5 million from an extra tranche of a convertible loan note.
Mothercare added: "We also secured a revised payment schedule with our pension scheme trustees, reducing contributions over the next 15 months."
The company said it has more funding options worth GBP50 million at its disposal, including the issuance of up to GBP25 million worth of shares and a GBP15 million loan from lenders Gordon Brothers.
The company said it is in discussions with a number of lenders about entering into new debt facilities.
Mothercare said its existing debt to its current lenders stands at GBP24 million.
Although the administration of its UK unit helped a "substantial" trimming of its debts, the reduction was still behind the company expectations, Mothercare noted.
The company said this was due to a shortfall in cash in relation to stock clearance of the unit.
Mothercare warned: "We currently estimate that the group may therefore have an obligation to make good a shortfall of some GBP10 million in relation to these loans."
"We are making good progress with the transformation plan and the board is confident that, taking into account the shortfall in the cash realisations from the Mothercare UK administration process, the group's financing requirements are well within the overall guidance," the company added.
In November 2019, the company appointed Zelf Hussain, Toby Banfield, and David Baxendale of PricewaterhouseCoopers LLP as administrators to its struggling unit.
Starting from May last year, the company reviewed its operations and found that the UK retail operations - which included 79 stores - are not capable of returning to a level of "structural profitability".
By Eric Cunha; ericcunha@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
Mothercare (MTC)