(Bloomberg) -- Mothercare Plc has started talks with its lenders seeking a reprieve on debt terms amid challenging market conditions that have left it needing to borrow more.
The U.K.-based childrenswear retailer will need to draw on existing debt facilities up to their limits while it seeks new financing in the next financial year, it said in a statement on Friday.
HSBC Holdings Plc and Barclays Bank Plc refinanced Mothercare's credit lines in May 2017 with a 62.5 million-pound ($86 million) revolving credit facility that starts maturing in November. The company also has a 5 million-pound uncommitted line and can draw up to 75 million pounds after approval from the lenders, it said in its 2017 annual report.
The U.K.'s retailers are facing a relentless competitive squeeze from the shift to online shopping as well as Brexit-induced weakness of the pound that's boosting their costs while depressing consumer spending power. Earlier this week, Carpetright Plc issued a profit warning, while Maplin Electronics Ltd. and the local arm of Toys "R" Us Inc. both filed for insolvency.
Mothercare also said that its adjusted profit before tax will be at the lower end of guidance between 1 million pounds to 5 million pounds. Mothercare shares dropped 16 percent on Friday to 21 pence on the pound at 12:38 p.m. on the London Stock Exchange, and are 67 percent lower since the beginning of the year.
To contact the reporter on this story: Luca Casiraghi in London at lcasiraghi@bloomberg.net.
To contact the editors responsible for this story: Abigail Moses at amoses5@bloomberg.net, Chris Vellacott
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