A deal to take over fashion retailer Matalan and end founder John Hargreaves’ control has been agreed.
Lenders for the Liverpool-headquartered company are to take ownership of the chain in a recapitalisation process.
The group, led by Invesco, Man GLG, Napier Park and Tresidor, have sealed the process after Matalan launched a sales process in September.
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The transaction is due to complete on January 26.
The lenders have cut the group gross debt by £257m to £336m and agreed up to £100m in new growth funding as part of the deal.
Sources close to the process have told BusinessLive that the deal has helped safeguard jobs at Matalan and that it is a positive move.
They added that Matalan had been "limping behind" on online sales but that its agreement with THG will help address that in the coming months.
Stephen Hill, Matalan's chief financial officer, said: "Matalan is a fantastic business and I am pleased that with the support of our First Lien Noteholders, its ongoing future has been secured via a materially lower level of debt and a reset balance sheet.
"As we transition to new ownership and having worked with John and the Hargreaves family for over 20 years, it would be remiss not to emphasise the contribution they have made to building the great business we have today and the many opportunities that lie ahead.
"On behalf of the Matalan team, I would like to express our sincere thanks and appreciation.
"It is clear in our third quarter and recent trading performance that whilst the market remains challenging, customers have demonstrated a strong affinity to our brand and proposition, evidenced from our robust and ongoing sales growth.
"However, the business must continue to adapt its approach to such market conditions, increasing its level of agility and margin resilience."
Matalan has also revealed that its revenue totalled £312.8m in the 13 weeks to November 26, 2022, up from the £291.4m it achieved during the same period in 2021.
Its pre-tax losses were also cut from £41.3m to £20.1m.
Founder John Hargreaves stepped down as Matalan's chairman in September 2022 in order to bid to keep control of the brand.
However, following the news he has not been successful, a spokesperson for the Hargreaves Family Private Office said: "John Hargreaves and the Hargreaves family are disappointed by today’s announcement by Matalan.
"From the day he founded the company in 1985 through to the current sales process, John’s focus and commitment has been to act in the best interests of the company, its employees, suppliers and business partners.
"The Hargreaves family and Elliott bid would have left Matalan with less than £200m of debt and ultimately ensured it was best positioned for long-term success.
"John Hargreaves does not believe that the deal announced today with the first lien investors is an optimal outcome for Matalan and its key stakeholders.
"In particular, he is concerned that it fails to address the needs of the business to adequately deleverage its balance sheet and secure an appropriate long-term owner for the company, both of which were central to the Hargreaves family led bid."
Matalan employs around 11,000 people and operates about 250 stores across the country.
Sources close to the new owners also pointed out that the company had been carrying nearly £600m of gross debt and had been due to refinance £350m of it this year.
As a result of the debt-for-equity swap, that total will not fall to around £335m.
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