Matalan - comment

We understand the 2nd Lien holders have put in a bid for the company. The offer allegedly rests on the £200m staple finance offered by the 1st Lien holders, includes cash of £150m and credit bids the value of the 2nd Liens. 1L bonds have spiked, but we are not sure of the conditions attached to such a bid. We have heard of levels in the mid 90s on Friday afternoon, but are assuming that’s only a short squeeze. Certainly, if such levels were to persist, we’d be sellers.

The company published Q223 financials this morning. Gross Margin was disappointing at 44%, even given everything we know. However, the company has not released further information on current trading beyond the statement it released the other day and as a result of ongoing proceedings there was no call planned for today.
Finally, over 90% of Matalan 1Ls have acceded to the lock-up agreement, supporting the extension of the notes by six months to July 2023. This gives the company the time to negotiate a deal following termination of the current auction process in mid December. As a result, Matalan are out with a solicitation request to facilitate the extension.

We are updating our analysis of Matalan and will upload in due course.