Matalan completes £525m refinancing

DISCOUNT retailer Matalan has completed a £525m refinancing.

Founder John Hargreaves recently withdrew the Skelmersdale business from sale after private equity bidders failed to meet his £1.5bn asking price.

The refinancing includes £300m of bank facilities, arranged by Goldman Sachs and Lloyds TSB Corporate Markets, and a £225m high yield bond issue by Matalan Finance.

There has been some speculation that Mr Hargreaves, a former Liverpool market trader who is now based in Monaco, will receive a dividend payment of more than £200m as part of the deal.

Mr Hargreaves, who opened the first Matalan store in Preston in 1985, took the retailer private in an £827m deal backed by £410m of debt three years ago.

The company has performed strongly during the recession. Trading figures for the Christmas period showed like-for-like sales were up by 9.3% in the 13 weeks to January 2, with total sales ahead 10.4% to £362m.

Manchester law firm DLA Piper has been working on the refinancing for the last three months. The deal team included Martin Hallam, Matt Christmas, Steven Devlin, Nick Roome and Carolyn Blanchard from the Manchester office and Sharon Smith and Julian Ogley in London.

Matalan was also advised by US law firm Cahill Gordon & Reindel who acted for the company as to New York law on the high yield bond issue.

* Matalan’s chief executive Alistair McGeorge was one of 23 business leaders to put their names to a letter to the Daily Telegraph backing Conservative plans to scrap a proposed increase in national insurance contributions.

The letter, which is also signed by Sir Stuart Rose of Marks & Spencer, Ben Gordon of Mothercare and easyjet founder Sir Stelios Haji-Ioannou, also call for greater efficiency in the public sector.

“Cutting government waste won’t endanger the recovery,” write the businessmen, “but putting up national insurance will.”