Matalan debt deal wipes out founder
Discount retailer Matalan has opted for a refinancing package with four lenders that gives them a controlling equity stake.
Invesco, Man GLG, Tresidor and Napier Park will reduce their £200m debts and provide £100m of new equity and offer new shares to potential investors, including Hargreaves.
Quoting family sources, the Sunday Times reported that the deal reduces debt in the business by £260m to £335m.
Hargreaves founded the business in the 1980s on a Liverpool market stall, opening his first store in 1985 and building the chain into a High Street staple. Matalan currently employs 11,000 people across 230 stores and its ecommerce operation.
But Monaco-based Hargreaves, who quit as chairman in December to pursue a bid with US investor Elliott Advisers now faces a capital gains tax bill for £135m for a historic share sale after he moved to the tax haven in 2000.
Matalan is now seeking a new chairman to support interim chief executive Nigel Oddy, an experienced retailer who previously led New Look, House of Fraser and The Range.
In a statement issued this morning (Monday 16 January 2023), the company said the recapitalisation will support the ongoing development and enhancement of Matalan stores, the logistics network and website.
Investment manager 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 chief financial officer, speaking on behalf of Matalan’s board said: “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.
“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 long standing investors in the business, to deliver continued profitable operations and performance recovery, ongoing strategic development and our material growth ambitions.”
This story was updated to include additional comments from Invesco and the Matalan board at 13:48pm