Matalan’s founder and lenders are preparing for a battle over the retailer’s future Retail Gazette
// Matalan founder John Hargreaves is expected to invest between £25million and £50million in the company as it struggles with its debt burden
// 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 in the retailer in exchange for his family retaining complete control of the company.
However, Hargreaves, who reinstated himself as chairman of the value retailer last month, is expected to face opposition from lenders This is reported by Sky News that some of Matalan’s senior creditors are unconvinced by the proposal and are preparing to put the retailer up for sale.
It’s unclear how much Hargreaves is willing to invest in the retailer, although sources suggest it could be anywhere from £25million to £50million.
The Hargreaves family is being advised by Lazard, while Matalan’s senior lenders are being advised by Perella Weinberg Partners.
CONTINUE READING: Matalan needs to replace £350million in debt by January to continue trading
Hargreaves returned to the value retailer last month as it struggled with its debt mountain after a 15-year absence, replacing chief executive Steve Johnson.
Matalan’s £350million bond is due to be redeemed in January, with a further £130million due a year later.
In June, it agreed to refinance its short-term maturities related to the large corporate Covid-19 relief plan and its revolving credit facility. This has been replaced with a new £60m loan facility for up to 18 months.
Despite struggling with its debt, Matalan’s trade remained resilient during the cost-of-living crisis.
Revenue rose 38% to just over £1 billion in the 12 months to 26 February 2022, while EBITDA grew 145% to £198 million.
The good run continued in Matalan’s first quarter through May 28, when sales rose nearly 30% to £286.5 million as shoppers sought value amid the cost of living crisis.
The fashion and home retailer attributed the increase to the value, quality and choice it offers its customers as shoppers looked for cheaper deals.
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