Matalan secures recapitalisation via new owner, founder ‘disappointed’

Matalan has been acquired by a group of lenders that will take over the discount retailer in a deal that is said to reduce its significant debt burden.

The group, which includes Invesco, Man GLG, Tresidor and Napier Park, will assume control of the company next week, Matalan said in a press release.

As part of the deal, the shareholders, which already hold more than 70 percent of Matalan’s secured notes, will inject up to 100 million pounds to support the growth of the business.

The agreement will see the company’s gross balance sheet debt reduced from 593 million pounds to 336 million pounds, with the new debt now set to mature in 2027.

Speaking on the company’s recent trading, Stephen Hill, Matalan’s CFO, said that in its third quarter it was clear the market remained “challenging”, however customers had “demonstrated a strong affinity” to the brand and its proposition.

Hill continued: “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.”

Hargreaves disagrees on outcome

Despite positive sentiments on Matalan’s end, former head of the retailer John Hargreaves expressed concern over the deal.

According to multiple reports, the founder of the business was said to be going head-to-head with the lenders on a 50-50 takeover deal alongside Elliot Capital Management.

A spokesperson for the Hargreaves Family Private Office told Prolific North: "John Hargreaves and the Hargreaves family are disappointed by today’s announcement by Matalan. From the day he founded the company in 1985 through to the current sales process, John’s focus and commitment has been to act in the best interests of the company, its employees, suppliers and business partners.

"The Hargreaves family and Elliott bid would have left Matalan with less than 200 million pounds of debt and ultimately ensured it was best positioned for long-term success. John Hargreaves does not believe that the deal announced today with the first lien investors is an optimal outcome for Matalan and its key stakeholders.

"In particular, he is concerned that it fails to address the needs of the business to adequately deleverage its balance sheet and secure an appropriate long-term owner for the company, both of which were central to the Hargreaves family led bid."