Mothercare strikes £30m deal with Indian giant Reliance

Mothercare is closing on a £30m deal with one of India’s biggest retail groups that will provide the London-listed company with a long-awaited solution to its financial travails.

Sky News has learnt that Mothercare, shares in which have been suspended since the beginning of the month, is on the verge of an agreement with Reliance Brands.

A person close to Reliance said on Thursday that the deal was expected to involve the creation of a joint venture between the two sides that would give it control of Mothercare's brand in the Indian market.

In return, it was likely to pay about £15m in cash to Mothercare, which would be used to help refinance the company's debt, they said.

Mothercare was once one of Britain's biggest listed retailers by market valuation but has seen an inexorable decline over the last 20 years.

It now has a market capitalisation of just £20m.

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In May, it said in a trading statement that it was continuing to pay an interest rate on its loan facility of over 19%.

The company also has a pension deficit larger than its market capitalisation.

Reliance, which owns Hamleys, recently struck a brand licensing deal with Superdry to acquire the British fashion brand's intellectual property assets in India.

Mothercare has been contacted for comment while Reliance could not be reached for comment.