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Matalan founder and lenders set for battle over retailer’s future Retail Gazette

Matalan founder and lenders are set to clash over plans for the retailer’s future
// Matalan founder John Hargreaves is set to invest between £25 million to £50million into the business as it struggles with its debt pile
// The retailer’s senior lenders are understood to be considering putting Matalan up for sale

Matalan founder John Hargreaves is preparing to invest tens of millions into the retailer in exchange for his family retaining outright control of the business.

However, Hargreaves, who reinstated himself as chairman of the value retailer last month, is set to face opposition from lenders as Sky News reports that some of Matalan’s senior creditors are unconvinced by the proposal and are preparing to put the retailer up for sale.

It is unclear how much Hargreaves is prepared to plough into the retailer, although sources have suggested it could range between £25 million and £50 million.

The Hargreaves family is being advised by Lazard, while Matalan’s senior lenders are being advised by Perella Weinberg Partners.

READ MORE: Matalan must replace £350m of debt by January to continue trading

Hargreaves returned to the value retailer after a 15 year absence last month as it struggled with its debt pile, replacing executive chair Steve Johnson.

Matalan’s £350 million bond is due to be repaid in January while a further £130 million is due a year later.

In June it agreed a refinancing of its near-term maturities relating to the Covid-19 large business load scheme and its revolving credit facility. This was replaced by a new £60m loan facility for up to 18 months.

Despite wrangling with its debt, Matalan’s trading has remained resilient during the cost-of-living crisis.

Sales surged 38% to just over £1 billion for the 12 months to February 26, 2022, as EBITDA rocketed 145% to £198 million.

The good run continued in Matalan’s first quarter to 28 May, when sales rose almost 30% to £286.5 million as shoppers sought out value amid the cost-of-living crisis.

The fashion and home retailer attributed the uplift to the value, quality and choice it offers customers as shoppers sought out better-value deals.

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