Matalan, a well-known UK retailer, is in desperate need of a £50 million financial injection to overcome the hurdles brought on by the coronavirus pandemic. The funding will be split into two parts: a £25 million revolving credit facility that will come from the UK government’s Coronavirus Large Business Interruption Loan Scheme and a purchase of £25 million worth of new notes by a group of existing bondholders.

With the closure of non-essential retail stores in the UK on March 23rd, Matalan was forced to shut down all 232 of its stores, resulting in a significant drop in sales throughout April and May. To mitigate the impact, the company made several adjustments, including placing 11,000 employees on furlough, deferring rent payments, and offering to pay suppliers only 70% of their bills from April to July.

Since April 27th, Matalan has been actively exploring alternative funding options. The proposed £50 million injection is crucial for the company to navigate the short-to-medium-term cash flow challenges caused by the temporary loss of in-store revenue due to Covid-19.

While one-third of bondholders have already shown their support for the plan, the approval of the majority of bondholders by 5pm on June 3rd is necessary for the funding arrangement to move forward. Matalan has cautioned creditors that if the consent solicitation fails, the available financing alternatives will be far less favorable.

In conclusion, Matalan’s request for £50 million in funding from lenders exemplifies their proactive approach in tackling the financial hardships brought on by the Covid-19 pandemic. The company aims to maintain its liquidity and strengthen its position during these challenging times, ensuring the continuity of its operations.

Useful links:
Matalan Official Website
Coronavirus Large Business Interruption Loan Scheme Information