Matalan hunts for buyer as Joules credit insurer pulls cover

2 Comments

Matalan has hoisted the ‘for sale’ sign as the value fashion firm grapples with inflationary pressures.

Matalan storefront

City sources have suggested Matalan’s lenders would require more than £100m in fresh equity

Founder John Hargreaves is working with advisors at Lazard to either find a buyer for the entire business or an investor to inject fresh equity, according to The Sunday Times.

Matalan has £350m of secured debt falling due at the end of January 2023, and City sources have suggested that its lenders would require more than £100m in fresh equity.

Hargreaves, who reinstated himself as Matalan’s executive chair in July, has offered to plough tens of millions of pounds into the business, but it is likely to require more cash.

As previously reported, Monaco-based Hargreaves is facing a tax bill of up to £135m after a court ruled he had to pay capital gains tax on the sale of £231m in shares just two months after he moved to the tax haven back in 2000.

Matalan employs around 11,000 people across 230 UK stores. Its sales grew 38% to £1.03bn last year and it had £121m of cash at the end of May.

The retailer declined to comment.

Fellow fashion retailer Joules is also feeling the squeeze after leading credit insurer Allianz Trade pulled cover for its suppliers.

The removal of credit insurance has thrown its rescue deal with Next into doubt, though Joules insisted last week that “positive discussions” are continuing.

Credit insurance protects suppliers against customers going bust between accepting an order and being paid. The withdrawal of such cover often prompts suppliers to demand cash from retailers upfront.