Invesco Ltd. and Man GLG Plc will take over British discount retailer Matalan Ltd. in a deal that will reduce the debt burden of the struggling UK retailer.
(Bloomberg) — Invesco Ltd. and Man GLG Plc will take over British discount retailer Matalan Ltd. in a deal that will reduce the debt burden of the struggling UK retailer.
A group of funds holding more than 70% of the secured notes will assume control next week, according to a statement from Matalan on Monday. The new shareholders, which include Napier Park Global Capital and Tresidor Investment Management, will inject up to £100 million ($122 million) of fresh funds to support the company.
As part of the transaction, Matalan’s debt will be lowered by 43% to £336 million and the new debt will start maturing in 2027. The takeover comes at the end of a sale process, which also involved founder John Hargreaves bidding with Elliott Capital Management. A spokesman for Hargreaves’s family private office said they were disappointed by today’s announcement.
UK Retailer Matalan on Sale After Striking Deal With Creditors
Around 57% of Matalan’s £350 million senior bonds plus accrued interest will be reinstated, with the rest written off. Meanwhile, the £80 million junior notes and £50 million of Matalan bond debt owed to Hargreaves will be wiped out in full, according to a corporate presentation also released on Monday.
“Market conditions are challenging for many retailers, but Matalan is a large and successful business with clear strategic objectives,” Invesco said in a separate statement, speaking on behalf of senior noteholders. “Our firm, and the other first lien noteholders who are backing Matalan, have huge confidence in the prospects for the business.”
The new money comes at a crunch time for Matalan. The company was forecasting its funding gap to peak in April at £47.2 million as Britain’s cost of living crisis squeezes consumers. Moreover, Matalan stocked up on inventories and had to offer heavy discounts to clear space.
The company also cut profit forecasts on Monday. It expects Ebitda for the full year to be £30.1 million, about 63% below previous estimates.
–With assistance from Katie Linsell.
(Adds Hargreaves family office statement.)
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