Matalan founder John Hargreaves is set to pay himself a £250m dividend as part of refinancing plans at the value chain.

Hargreaves is reportedly in talks with banks and investors about a £525m refinancing of the 200-store chain that would repay Matalan’s debt, which is thought to be £260m. According to the Sunday Times, the rest of the refinancing package would be used as a dividend for Hargreaves. The total financing packet is understood to include £300m of bank debt and a £225m bond issue.

The dividend would be one of the biggest ever for a British retail company but falls short of the £1.2bn Arcadia boss Sir Philip Green paid himself in 2005.

The refinancing of Matalan follows an unsuccessful attempt by Hargreaves to sell the Lancashire-based business earlier this year. Potential investors balked at the £1.5bn asking price.

Hargreaves began his career selling Marks & Spencer seconds from a market stall and opened the first Matalan store in 1985 in Preston after being inspired by American out-of-town discount stores.

The business floated on the London Stock Exchange in 1998 and Hargreaves bought it back in 2006.

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