// Matalan asks for £50m funding from existing lenders
// The retailer looks to survive the Covid-19 crisis
Matalan has reportedly asked two of its existing lenders, Barclays and Lloyds, to inject £50 million of government-backed funding to prevent its business from running out of cash.
The value fashion retailer’s billionaire founder and owner John Hargreaves is reluctant to dive into his own fortune despite the desperate plea for help, The Sunday Times reported.
Matalan, which celebrates its 35th anniversary this year, has furloughed over 11,000 workers since the coronavirus job retention scheme came into effect.
Since being forced to shut its 232 stores in the UK as part of the lockdown, Matalan has deferred rent payments and offered to pay suppliers just 70 per cent of their bills for April, May, June and July.
When the coronavirus pandemic struck the UK, Matalan appointed advisers from Deloitte to help raise emergency funds, but investors were reluctant because Hargreaves was not willing to invest his own money.
Banks will lend to Matalan under the coronavirus business interruption loan scheme only if they will be among the first in line for repayment should the company default.
Matalan has £480 million of bonds in issue, with £350 million maturing in 2023 and £130 million in 2024. It has fully drawn its £50 million of credit facilities.
Moreover, this is not the first time that Matalan has sought funding, as in mid-April, the retailer was considering options to secure “short term funding” after stating that it has not faced “such difficult and unpredictable times” in its 35 years of trading.
Matalan sought £60 million at the time to help it survive through the coronavirus pandemic after closing 232 stores.