Mothercare aims to strengthen its presence in Asia with a new joint venture and a refinancing deal.
- The company secures £24 million in financing to support its expansion strategy.
- Mothercare partners with Reliance Brands UK, establishing a new venture in several Asian countries.
- A 51% stake, acquired by Reliance Brands, marks a shift from a franchise agreement.
- The refinancing deal with Gordon Brothers slashes previous debt significantly.
Mothercare is poised to broaden its reach into Asian markets with a strategic £24 million refinancing deal. The nursery specialist has entered a notable joint venture with Reliance Brands UK, significantly targeting its intellectual property assets across India, Nepal, Sri Lanka, Bhutan, and Bangladesh. This partnership is notable for Reliance’s 51% stake, acquired for £16 million, signaling a shift from the longstanding 30-year franchise agreement with Mothercare that was established six years ago.
This development comes alongside an essential refinancing arrangement approved with Gordon Brothers to replace the previous £19.5 million loan with a streamlined £8 million facility. The objective of this financial restructuring is to bolster Mothercare’s fiscal flexibility in the fiscal year 2025 and beyond, as highlighted by Clive Whiley, the company’s chairman. He emphasized the rejuvenated confidence and strengthened operational capacity resulting from the deeper collaboration with Reliance Brands.
Clive Whiley expressed optimism, stating, “Today’s agreement strengthens our operations in South Asia through an even closer working relationship with Reliance, our existing valued franchise partner, and underline the intrinsic value of the Mothercare brand strength, coterminously supporting a material reduction in our bank facilities and leverage.”
Whiley further noted the longstanding association and trust developed between Mothercare and Gordon Brothers over the years. He acknowledged the support the partnership provides, describing the revised facility agreement as reflective of this relationship, enhancing Mothercare’s equity valuation through its accretive nature. The revised deal offers Mothercare a significant reduction in its cash interest costs, thereby unlocking substantial financial flexibility moving forward.
These strategic moves mark a pivotal moment for Mothercare’s growth and stability in the Asian market.
