Clothing chain gets respite from £500m debt

LIVERPOOL retailer Matalan has been given brief respite as it struggles with its £500m debt.

According to reports, Lloyds Bank has agreed to reset the covenants on Matalan’s loans, which will give the discount clothing chain breathing space.

It follows Matalan’s entry into the Lloyds Banking Group’s special measures division after disappointing results the retailer said was the result of tough trading conditions.

In the three months to January 2, online sales fell by 50.9% to £2.7m.

Analysts say the resetting of the covenants may give Matalan time to current adapt to trading difficulties, but it is still coping with the £500m debt.

The company has suffered since founder John Hargreaves carried out a bond refinancing of the company in 2010, hoping to remove a £250m dividend.

Ratings agency Standard & Poors lowered its long-term credit rating on the retailer in November 2015, after a 90% fall in second-quarter sales as a result of operational problems at the Matalan warehouse in Knowsley, Liverpool.