Matalan rescue deal to wipe founder’s control of group
According to the Times, Matalan is set to announce that lenders Invesco, Man GLG, Tresidor and Napier Park will instead take control after agreeing a debt-for-equity swap
Matalan founder John Hargreaves is reportedly set to lose control of the group after its lenders finalised a rescue deal that eliminates his equity, despite the retail tycoon submitting his own takeover bid for the group.
According to the Times, Matalan is set to announce that lenders Invesco, Man GLG, Tresidor and Napier Park will instead take control after agreeing a debt-for-equity swap.
It comes as they were reportedly unwilling to accept any bids that arose from the group’s sale process.
In exchange for taking ownership, they will reduce gross debt from £593m to £336m, a day-1 reduction of £257m, and provide £100m in new funding.
According to reports, Hargreaves will not be repaid the £50m loan he gave to the company during the pandemic following the move.
The lenders were also said to be planning talks with unsuccessful bidders about a potential minority investment into Matalan.
Last month, the Times reported that Hargreaves had teamed up with Elliott Advisers, a private equity firm, for a 50-50 bid for Matalan. He was reportedly expecting his bid to be successful due to his “extensive” knowledge of the company.
Invesco, on behalf of the Ad Hoc Group of Noteholders, said: “Invesco has been an investor in Matalan for over ten years and is excited about the prospects for the business. Having been one of the investors who supported Matalan with additional financing during the Coronavirus pandemic, Invesco is now pleased to play its role in this transaction by ensuring that the debt burden carried by the group will be very substantially reduced.
“Present market conditions are challenging for many retailers, but Matalan is a large and successful business with clear strategic objectives and many compelling growth opportunities. Our firm, and the other First Lien Noteholders who are backing Matalan, have huge confidence in the prospects for the business.”
Stephen Hill, Matalan CFO, on behalf of Matalan’s board of directors, added: “Matalan is a fantastic business and I am pleased that with the support of our First Lien Noteholders, its ongoing future has been secured via a materially lower level of debt and a reset balance sheet.
“As we transition to new ownership and having worked with John and the Hargreaves family for over 20 years, it would be remiss not to emphasise the contribution they have made to building the great business we have today and the many opportunities that lie ahead. On behalf of the Matalan team, I would like to express our sincere thanks and appreciation.”
He added: “It is clear in our third quarter and recent trading performance that whilst the market remains challenging, customers have demonstrated a strong affinity to our brand and proposition, evidenced from our robust and ongoing sales growth. However, the business must continue to adapt its approach to such market conditions, increasing its level of agility and margin resilience.
“Many of the actions associated with this have already been taken as we move towards Spring. As we now enter a new chapter in Matalan’s journey, the Board is pleased to partner with our First Lien Noteholders, already longstanding investors in the business, to deliver continued profitable operations and performance recovery, ongoing strategic development and our material growth ambitions.”
