The group of first-lien lenders to Matalan are said to be close to finalising their deal which comprises a debt for equity swap in order to take control of the homewares retail business which its founder John Hargreaves had hoped to ‘save’ with backing from Elliot Advisers. Hargreaves had invested £50m in the business which he will unlikely to recover in the event of his bid failing.
The lenders are expected to see their proposal approved. It would secure Matalan in the short term by reducing its indebtedness whilst also providing additional investment of c£100 million to support a return to profitability and/or an onward sale. Matalan currently operates 230 stores and generates annual sales slightly north of £1bn but has faced mounting competition in recent years from supermarkets with their own brand clothing and homewares offerings and Primark.
It is unsure at this time whether there will be an ongoing role for Nigel Oddy at Matalan. He had been brought in as interim CEO.
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