23rd Sep 2014 08:04
LONDON (Alliance News) - Mother and baby products retailer Mothercare PLC saw its shares tumble Tuesday, after it declared a heavily discounted GBP100 million rights issue to help fund its new strategic plan to modernise its store estate and invest in IT.
The company declared a 9-for-10 rights issue at 125 pence per share, and said it plans to raise around GBP95 million in net proceeds, after expenses.
Mothercare shares were down 12% at 218.00 pence, one of the worst-performing stocks on London's main market.
"This fund-raising is a pivotal step for Mothercare. It will position us for the next phase of our strategy, which is focused on returning the UK to profitability, reinforcing the strong growth potential in our international operations, and as a result, generate sustainable long-term value for Mothercare shareholders," said Chairman Alan Parker in a statement.
Mothercare currently trades from almost 1,500 stores in around 60 different countries, but is looking to home in on shopping online. It said it will invest the funds in store closures and store refits, as well as new IT systems and an efficient operational infrastructure.
"We have set out our strategic plans for the turnaround of Mothercare and ELC in the UK. By modernising and transforming the UK into a digitally-led business supported by a modern store estate we will underpin the growth of the group's successful International business," said Chief Executive Mark Newton-Jones in the statement.
Mothercare said it will use around GBP25 million of the proceeds for store closures, GBP20 million for its store refurbishment programme, GBP10 million invested in digital systems and infrastructure, and GBP40 million to repay its existing term loan.
The company said the rights issue will be led by Numis Securities, J.P. Morgan Cazenove and HSBC.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Mothercare