Matalan seeks £50m funding injection from lenders
May 29, 2020
Matalan has announced it plans to raise £50 million from both existing bondholders and lenders to help it tide over the coronavirus crisis.
The funding consists of a £25 million revolving credit facility from the UK government’s Coronavirus Large Business Interruption Loan Scheme and £25 million of new notes that will be purchased by a group of current bondholders.
The plan, if approved by the majority of bondholders, will strenghten Matalan’s liquidity following the Covid-19 lockdown in the UK.
After the government announced the closure of non-essential retail stores on 23 March, all 232 Matalan stores were forced to close their doors, significantly impacting the retailer’s ability to generate sales during April and May.
11,000 employeees were placed on furlough, rent payments were deferred and the company offered to pay suppliers just 70% of their bills for April, May, June and July.
“On 27 April 2020, Matalan announced that it was assessing a number of alternative options to raise additional funding,” the firm said in a statement on Thursday.
“This funding is required to enable Matalan to manage the short-to-medium-term cash flow impacts following the temporary loss of store revenue arising solely due to the direct impacts of Covid-19.”
A third of bondholders have already indicated that they intend to approve the plan, but the funding arrangement requires consent from more than half of bondholders by 5pm on June 3.
If the consent solicitation fails, Matalan warned creditors that any other financing alternatives will be “significantly less attractive”.
Copyright © 2020 FashionNetwork.com All rights reserved.