Mothercare Share Discussion Threads

[loganair] 09/4/2018 22:26

DD - A second report mentioning an actual figure of possible number of stores that could be closed.


The struggling baby goods retailer is reportedly looking to enter into a company voluntary arrangement.

The move could see it close up to 50 of its 143 stores and negotiate down the rents on others in a bid to slash its costs.

[discodave4] 09/4/2018 21:16

So about £150m off their revenues for next year?

[blueball] 09/4/2018 13:35

I can see 5p loomimg.

[dealy] 09/4/2018 13:33

It's a miracle the UK is not already in recession with all the consequences for employment and government finances

[loganair] 09/4/2018 13:22

May not do by 100% however very likely wipe out a high percentage of the value.

[dealy] 09/4/2018 13:05

Fine. But it is not a given that the cva wipes out the equity

[dealy] 09/4/2018 12:30

Everyone is jumping the gun here. The company is either able to operate as a going concern or not. Alternative solutions that wipe out the equity are not alternatives.

[frazboy] 09/4/2018 12:21

Yes... I guess the hope is with the CVA that they can rapidly shed the loss making stores to prevent cash outflow. Thing is, should trading deteriorate even modestly then the CVA won’t help them, unless it also includes a liquidity injection

[loganair] 09/4/2018 12:19

As what happened with Marconi, the original share holders got 1 new Marconi Share for every 99 they already held with the rest of the company going to the Creditors.

For every £1,000 worth of share holdings before, became worth £10 afterwards.

[rhambo] 09/4/2018 12:16

Also under a CVA usually the creditors also take a haircut in the debt they are owed. You can sure as hell bet they won't agree to that before rinsing shareholder equity/funds first.

[rhambo] 09/4/2018 12:13

@dealy the nature of CVA is that creditors' interest will come first. There is no way they will allow a CVA unless they can guarantee a return for themselves. This will almost certainly be on the insistence that shareholders take a substantial haircuty, via d4e or a substantially dilutive placing.

[rhambo] 09/4/2018 12:12

JakNife is spot on. Shareholders will be left with choice of 0p or say 1-5p (depending on the extent of the dilution, I think 75% would be optimistic) under the CVA. If shareholders do not vote for the CVA, then the company will be liquidated.

Given this, there is no reason in my view for the share price to be as high as it currently is, it infers some sort of hope value in a knight-in-shining-armour bid.

[dealy] 09/4/2018 12:11

I don't see how this in itself wipes out shareholders unless creditors refuse or demand huge amounts of equity (not to be ruled out)

[loganair] 09/4/2018 11:55

The creditors vote on the proposal and the proposal will be approved if a majority vote of 75% by value of the total value of creditors at the meeting (whether in person or by proxy) vote in favour. A second vote, excluding connected creditors, is taken and provided that not more than 50% of creditors vote against the proposal, it is approved.

Once approved, all notified and included creditors are legally bound for the debt “frozen” in the proposal. No further legal action can be taken against the debtor company.

Once the agreed period is completed and the supervisor has issued a completion certificate, then the company leaves the CVA state. Any remaining unsecured debts (where partial repayment was approved) are written off and the directors continue to run the business.

The CVA should aim to, maximise creditors’ interests, preserve viable but distressed businesses, preserve economic activity and save jobs, in time return value to the creditors.

[frazboy] 09/4/2018 11:47

Why would shareholders agree to a CVA if it wiped them out?

[kmann] 09/4/2018 11:47

For those who havnt got a clue what they are talking about ...

'CVA – Once in place, a CVA allows a company to continue to trade with very little effect on the day-to-day running of the business. As long as the monthly repayments are made, companies will be allowed to retain any profits they make. In many cases, suppliers are happy to continue doing business with a company in a CVA, although they may ask for cash on delivery payments. Companies can also keep key contracts and accreditations which might be difficult to transfer in a new company created through an administration.

A company voluntary arrangement buys the time a company needs to restructure its affairs and put a viable plan for the future in place. This includes allowing the company to reduce the cash-flow burden by terminating employee and supplier contracts if required.

If a company entering a CVA has accumulated tax losses, these can be carried forward to offset liabilities arising from future profits.'

As i see it, it will, in effect, speed up the restructuring programme, the move to online will be transitioned sooner, so probably the best thing they can do imo.

[rhambo] 09/4/2018 11:42

is NOT run by administrators*