Mamas & Papas, on the top nursery brands in the UK, has hired consulting firm Deloitte to oversee the Company Voluntary Arrangement (CVA) in which it asks landlords of 60 of its 63 UK stores to cut rental costs. The CVA is part of its restructuring plan to master financial difficulties, and follows the investment of BlueGem Capital Partners.
Mamas & Papas is a manufacturer and retailer of prams, pushchairs, baby products, furniture and maternity wear based in the UK. The family business that was founded by David and Luisa Scacchetti in 1981 has grown to become on the top nursery brands in the UK, and also gained global popularity. In addition to its 63 stores in the UK and Ireland, the company has 45 stores worldwide, among others in New York, Amsterdam, Paris, Mexico City, Tokyo and Moscow.
Despite the company’s popularity and an increase in turnover of 13% to £108.2 million in the year to March 31, 2013, Mamas & Papas has found itself in financial difficulties. “While our international and wholesale businesses are performing strongly, the UK retail environment is the toughest I’ve experienced in the 30 years since we founded Mamas & Papas and it has become clear that we need to take action if we are to maintain our proud position as a brand trusted by parents across the world,” says David Scacchetti, Chairman of Mamas & Papas. To be able to overcome the financial distress, the company decided to undergo a major restructure of its retail business; it launched a strategic review and signed a deal to sell a majority stake to BlueGem Capital Partners in July of this year. The private equity firm decided to invest in Mamas & Papas under the condition that the retail company would cut rental payments and consider store closures as part of its restructuring plan.
To fulfil the rental payments cuts condition, Mamas & Papas is proposing a Company Voluntary Arrangement (CVA) in which it asks landlords of 60 of its 63 UK stores to cut the rental costs. The company has appointed Partners Daniel Butters and Clare Boardman of consulting firm Deloitte to oversee the CVA. Butters comments: “The proposed CVA will allow the group to revise lease terms and proceed with its wider restructuring plan. The proposals put forward offer the best possible solution for Mamas & Papas (Retail) Limited and all of its stakeholders in comparison to the likely alternative outcomes. The creditors will vote on the proposals on 10 September 2014.”