The mother and baby products retailer has asked its banks HSBC and Barclays for more headroom to help it invest in opening new stores as it seeks to turn around its UK business. It has brought in PwC to lead the discussions.
People familiar with the situation said there was no danger of the retailer breaching its banking covenants. However the terms of the loan, which relate to its financial performance, give it little flexibility to plan ahead and spruce up its estate during tough trading conditions.
Mothercare has been pushing to close underperforming stores, revamp others and expand online amid fierce competition from online rivals and supermarkets.
It wants to reduce the number of UK stores from 220 to 200, while also opening in new locations such as Westfield Stratford City.