Matalan lenders prepare for crucial summer financing talks

Matalan's HQ

Bondholders in Knowsley-based out-of-town discount retailer Matalan are set to appoint advisers ahead of talks about the chain’s future financing arrangements, according to Sky News.

This is against a background of rising inflation and worsening economic conditions, as consumers rein back on spending, with many focused only on essential items as the cost of living crisis worsens.

Reports claim key lenders to the chain, founded by Liverpool docker’s son John Hargreaves as a market stall in 1985, favour Perella Weinberg Partners as advisers ahead of a £350m repayment due early next year.

It is claimed more junior lenders, who are believed to be owed about £80m, are close to appointing Houlihan Lokey as their adviser. Talks between lenders and Matalan are expected to open this summer.

Mr Hargreaves, who was ordered to pay a tax bill of up to £135m earlier this year, is likely to have to invest tens of millions of pounds to retain outright control of the business.

He has been in dispute over the tax demand for almost 20 years, and has one final opportunity to challenge the ruling by the Upper Tier Tribunal – the highest court that oversees tax cases – assuming he lodged his case with the Court of Appeal by a March 4 deadline.

Matalan, one of the UK’s biggest privately-owned retailers, employs around 10,000 staff and has 230 UK stores, as well as more than 50 overseas, linked to franchise deals.

It said, back in February, that, following a “robust” Christmas trading period, it retained “a strong cash and liquidity position”.

It added: “Matalan is continuing to evaluate alternatives and monitor market conditions with respect to a potential refinancing of its outstanding indebtedness.”

Matalan has been contacted for comment.