Matalan founder steps down to mount takeover bid as sales process begins
Matalan founder, John Hargreaves, has stepped down as executive chairman to launch a bid to buy the out-of-town discount retailer.
The move coincides with publication of the Knowsley-based group’s second quarter figures that showed an increase in revenues in the 13 weeks to August 27, of £286.4m, which compares with £264.7m in the same period a year ago. EBITDA, post adoption of IFRS16, was £36.7m, against 361m a year ago.
The retailer announced the appointment of former New Look CEO, Nigel Oddy, as interim chief executive, with effect from October 3, 2022.
Matalan has also secured agreement with a majority of its First Lien Secured noteholders on the key terms of a comprehensive recapitalisation, offering around £200m of funding.
They have also offered to support Matalan’s bid to extend the maturity of First Lien Secured Notes of £350m maturing in January 2023 by six months.
The deal brings an extension of the maturity of the First Lien Secured debt for a significant period, a material reduction in the total debt of the group; and a significant strengthening of Matalan’s financial position which will enable it to execute on its business plan and deliver its growth strategy.
There were reports earlier this month that Matalan could be preparing to put up the For Sale signs.
This was driven by the impact of the cost-of-living-crisis on shoppers, and the prospect of securing refinancing packages next year.
The business, which surpassed the £1bn revenues mark in the year to February 2022, must repay a £350m bond next January, while a further £130m instrument is scheduled for repayment a year later.
John Hargreaves, the son of a Liverpool docker who set up the business in 1985, confirmed today (September 26) that he is stepping down as chairman while the strategic sales process of the group is under way.
Tim Isaacs, senior non-executive director, will become interim chairman.
Mr Hargreaves said: “Matalan is a business that has been in my DNA since the day I founded it in 1985.
“I am stepping down as chairman so that I can participate in the strategic sales process as a bidder. My focus and absolute commitment will remain to do what I believe is in the best interests of the company and all its stakeholders, in particular the 11,000 people we employ.
“My intention is to be instrumental in positioning the business for long term success. I am delighted to welcome Nigel Oddy as the business’s new CEO and am confident Matalan is in good hands.”
Mr Oddy said: “I very much look forward to working with the wider team, which includes many long-established suppliers and franchise partners, as we progress with the execution of the growth strategy of this unique and iconic retail business.
“I have followed Matalan closely through my career and have admired its excellent value and quality focused credentials. I have noted its particular momentum in recent years in driving ahead with its mission to offer an excellent omnichannel experience for the millions of families it serves up and down the nation, and beyond.
“Matalan has a long standing and loyal customer base, and we need to continue to offer them, as well as new customers, what the business has been known for over the past 37 years – great product at fantastic prices. Now, more than ever, value is so important to every shopper.”
At the end of the second quarter period, Matalan had unrestricted cash on balance sheet of £101.6m, compared with £173m a year ago and £73.3m in 2020.
The group has developed a four-year business plan which estimates that it can increase its annual revenues from £1.199bn in fiscal year 2023, to £1.284bn in 2024, £1.381bn in 2025, and £1.444bn the following year.