Matalan has announced that its debt payments have been kicked back several months, buying the high street retailer more time to find cash.
The discount clothes retailer said that a January deadline to refinance £350m of debt has been pushed back to July.
Matalan described the update as “an important milestone” in its recapitalisation plan and said it would provide “increased certainty” to the company’s 11,000 staff members.
The retailer has faced a turbulent couple of years due to the Covid pandemic, followed by inflationary pressures this year.
Founder John Hargreaves has been gunning to take back control of the retailer, entering into talks with prominent activist investor Elliott Advisors this month.
Hargreaves, who founded the retaler in 1985, has said Matalan was part of his DNA and pledged to be “instrumental in positioning the business for long-term success.”
However, the entrepreneur may face competition from Sports Direct tycoon Mike Ashley, who has been rumoured to be tabling his own offer.
Former New Look chief Nigel Oddy joined Matalan as interim CEO at the start of the month, after leaving the high street chain in June.
“With some retailers, particularly in the broad discount space, we are seeing lenders supportive of providing retailers with time to raise cash reserves during this quarter,” Jasvir Jootla, a restructuring partner at Gowling WLG law firm, told CityA.M.
Retail has entered into its so-called ‘golden quarter’, when companies usually enjoy their busiest trading period in the lead up to Christmas.
Many lenders are willing to provide waivers until after the seasonal trading months, Jootla added, although “this is on a case by case basis.”