Debt write-off for Matalan but founder Hargreaves on his way out

Bruised and battered retailer Matalan is set to tell markets tomorrow it has been rescued by a debt-for-equity swap with its lenders, according to a host of news reports this weekend.

Founder John Hargreaves, who founded the fashion firm some forty years ago, is set to lose control of the firm despite his own last-minute bid.

Lenders including Invesco will take control of the firm after a sale process failed to drum up sufficient attractive offers, according to reports in the Sunday Times and in Drapers.

Hargreaves will reportedly not be repaid a £50m loan he gave to the company during the Covid-19 pandemic.

He had attempted to team up in a 50:50 deal with investors Elliot Advisers.

The deal will ensure around 11,000 staff remain in their jobs.

Sky News’ Mark Kleinman first reported that the lenders were keen to take control of the firm which has been hit by pandemic restrictions and systemic shifts in the way people shop.

Matalan has been approached for comment.

A source close to the Hargreaves family told the Sunday Times that the deal would leave the retailer in the hands of inexperienced owners and make it vulnerable in the medium-term.