A group of funds including Invesco and Man GLG is close to closing a deal to acquire one of Britain’s largest homewares stores.
According to a plan presented by the syndicate, the funds would inject close to £100 million of additional capital into Matalan to ensure its short-term viability.
According to sources close to the situation, the lenders were discussing with Nigel Oddy, the chain’s temporary chief executive. The potential of making the position permanent if they were successful in seizing control.
The group of first-lien lenders
The group of first-lien lenders has been competing with rival suitors. Such as Matalan’s founder, John Hargreaves, who is backed by the dreaded American investor Elliott Advisers, to acquire Matalan.
Matalan provided an update on the selling process three days before Christmas. Confirming that it has received proposals from multiple parties.
“The company is now evaluating all bids, and constructive negotiations with interested parties and their advisors are ongoing,” the statement read.
“Additionally, the ad hoc group of existing First Lien Noteholders, represented by Invesco, Man GLG, Napier Park, and Tresidor. Which now holds over 70% of the First Lien Secured Notes, has reaffirmed its commitment to a recapitalization if required.
It stated that it hoped to finalize a transaction by the end of January.
“All agreements under consideration provide for a substantial decrease of Matalan’s debt, including the First Lien Secured loan, an extended debt maturity profile. And any fresh funding that may be necessary,” the company said on December 22.
The solid and sustainable balance sheet will put the company in a strong financial position. Allowing it to implement its business plan and growth strategy.
Matalan, which Mr. Hargreaves created in 1985, has an immediate deadline to restructure £350 million in debt.
It recently obtained a £60 million loan from Bantry Bay. A company in which Elliott owns a share, to bolster its balance sheet in anticipation of a prolonged decline in consumer sentiment.
Additionally, it has an e-commerce portal and more than 50 franchise locations abroad.
The business claims to have 11 million customers.
Given the current situation of the British retail industry, it is unknown what valuation any sale process may generate.
In the past few months, global inflationary pressures have eroded profits, while supply chain issues have affected stock availability.
Matalan cautioned in the summer that its “capacity to successfully restructure our loans is contingent on geopolitical, economic, and market circumstances beyond the company’s direct control.”
After a brief return as Matalan’s chairman in the fall, Mr. Hargreaves resigned to participate in the bidding process.
Paul Copley, a former restructuring partner at PricewaterhouseCoopers. And an experienced retail board member, was recently selected as the chain’s latest chairman.
Lazard advises the Hargreaves family, while Teneo handles the sale and Perella Weinberg Partners advises the first-lien or senior lenders.