Matalan’s founder has signalled he’ll take part in a recapitalisation course of for the low cost retailer, ending hypothesis that he could stroll away from the enterprise.
John Hargreaves mentioned Matalan, which sells trend and homeware from greater than 200 shops, “has been in my DNA since the day I founded it in 1985”.
“I am stepping down as chair so that I can participate in the strategic sales process as a bidder,” he added. “My intention is to be instrumental in positioning the business for long-term success.”
The 78-year-old, Monaco-based businessman misplaced a high-profile battle with UK tax authorities this yr, main some to query whether or not he would have the need to inject extra into the corporate he took personal in 2006.
The Liverpool-based group is burdened with greater than £500mn of debt from an earlier recapitalisation and must refinance £350mn of this in 2023.
The firm mentioned on Monday that it had agreed with “over a majority” of the holders of this tranche to increase the maturity by six months, to July subsequent yr, permitting a bidding course of for the retailer to happen. The noteholders have additionally agreed to supply as much as £200mn of financing to any occasion all for buying the corporate.
If the sale course of doesn’t result in a transaction, the noteholders have dedicated to another recapitalisation plan that will “result in a material reduction of Matalan’s debt” and an extension of the £350mn tranche of debt by greater than 4 years, to September 2027.
Although the corporate has put itself up on the market, bankers and analysts mentioned the secured collectors had in impact compelled its hand and would find yourself in command of the enterprise if another proprietor didn’t come ahead.
The provide of a £200mn financing bundle implies that any bidder must inject about £150mn of recent fairness as a way to refinance the 2023 debt, they added. In that state of affairs, the prevailing fairness would most likely be nugatory.
Hargreaves stays a pure proprietor given his deep data of the enterprise and the ties between Matalan and different corporations owned by his household. In 2020, he injected further funds into the enterprise by shopping for its headquarters constructing and changing some debt into fairness.
Trading at Matalan has recovered nicely for the reason that peak of the pandemic, with the corporate reporting second-quarter gross sales of £286mn, up from £265mn final yr, however a slip in revenue as prices elevated.
The firm mentioned it was cautious concerning the affect of inflation on shoppers’ budgets and that it confronted vital value pressures, notably in freight the place prices will probably be £35mn greater than pre-pandemic ranges this yr and subsequent. Energy costs can even be vital subsequent yr, as soon as hedging safety falls away
Matalan has set out a marketing strategy that envisages income rising to £1.44bn by 2026, up from £1.03bn final yr, with ecommerce accounting for 1 / 4 of that whole in opposition to lower than a fifth at current.
Source: www.ft.com