// Matalan is one step closer to securing £50m funding to help manage effects of Covid-19
// Of that funding, £25m is to come from bondholders while the other £25m will come from a government scheme
Matalan has said it is one step closer to securing £50 million in additional funding from existing stakeholders to help mitigate the impact of Covid-19 on the business.
The funding is split between £25 million from Matalan’s existing bondholders via a newly issued note and a £25 million revolving credit facility from the UK Government’s Coronavirus Large Business Interruption Loan Scheme (CLBILS) via two of its banks.
Bondholders will need to consent to the funding arrangement by 5pm on June 3 while the CLBILS funding will need to be paid back by December 31.
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The value fashion retailer, founded by John Hargreaves, first started to consider options to secure “short term funding” in April, after stating it has not faced “such difficult and unpredictable times” in its 35 years of trading.
Matalan trades from 232 stores and was forced to temporarily close them amid the government-mandated lockdown, with almost all staff placed on the furlough scheme.
However, last week it re-opened 15 based on the government’s updated guidance on what is classed as “essential”.
“On 27 April 2020, Matalan announced that it was assessing a number of alternative options to raise additional funding,” a spokeswoman said this week.
“This funding is required to enable Matalan to manage the short-to-medium-term cashflow impacts following the temporary loss of store revenue arising solely from the direct impacts of Covid-19.
“Matalan believes the terms of the additional funding are, in combination, the most attractive sources of additional liquidity available at this time.
“Should the consent solicitation fail, the deliverable financing alternatives are likely to be significantly less attractive to holders of the notes.
“Matalan believes 33 per cent of holders of the notes have already indicated that they intend to deliver their consents.”