Matalan - comment

Back in October, the guidance to £60m EBITDA for the year appeared very aggressive to us and we asked management on the subject. However, Matalan are usually good at predicting Q4 (not always positive) and Q3 was already half over. So we gave management the benefit of doubt. It wasn’t supposed to be and the shortfall now requires fresh cash of £25m, mostly to be injected super sr. In return, bonds are probably to extend by two to three years as the company’s new plan itself has a four-year horizon. Goals are loftier than we thought with a £150m EBITDA target, but not entirely out of the realm of possibilities (Matalan have been there before - a long time ago and only very briefly). It is not anticipated that the bonds need to go PIK. We remain long and not-quite-right the 10% bonds as well as a sliver of equity.