Homewares and fashion chain Matalan is to be taken over by a group of its debt holders.
The chain has been acquired by a group of investors including Invesco, Man GLG, Tresidor and Napier Park, which have swapped part of their debt for equity. Matalan has seen its debts cut from £593m to £336m, with the new owners promising to invest £100m.
However, founder and chairman John Hargreaves has said the deal – which is expected to be completed on 26 January – does not go far enough in reducing debts. He had joined forces with private equity firm Elliott Advisers to buy the retailer.
‘The Hargreaves family and Elliott bid would have left Matalan with less than £200m 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,’ said a statement.
‘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,’ says Stephen Hill, Matalan cfo.
‘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,’ said a statement from Invesco on behalf of the debt owners.
