The owner of Waterstones is in talks with the founder of Matalan about backing his bid to take full control of the fashion retailer.
Elliott Advisors has refused to deny the story, first reported by Sky News, that it is considering funding an offer by John Hargreaves to buy back the Liverpool chain.
The US firm also has stakes in the likes of Avant Homes, Travelport and bookseller Foyles. It has previously invested in shopping centre owner Hammerson and pharmaceuticals giant GSK.
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Matalan was founded by Mr Hargreaves in 1985 and put itself up for sale towards the end of last month.
Mr Hargreaves stepped down as chairman to make a a bid for the retail chain, having returned as chairman in July.
Matalan also recently appointed Nigel Oddy as its interim chief executive.
The chain confirmed last month that it had secured an agreement with over a majority of its First Lien Secured noteholders on the key terms of a "comprehensive recapitalisation".
A group of noteholders offered to provide £200m of senior secured, stapled financing to interested parties, as well as pledging to support Matalan’s intent to extend the maturity of First Lien Secured Notes of £350m maturing in January 2023 by six months.
The company had been approaching a January deadline for refinancing £350m in debt, with an additional £130m instrument scheduled for repayment the year after.
Matalan also announced its revenue for its second quarter, the 13 weeks to August 27, totalled £286.4m, up from £264.7m in the same period last year.
In a statement released last month, Mr Hargreaves said: "Matalan is a business that has been in my DNA since the day I founded it in 1985.
"I am stepping down as chairman so that I can participate in the strategic sales process as a bidder.
"My focus and absolute commitment will remain to do what I believe is in the best interests of the company and all its stakeholders, in particular the 11,000 people we employ.
"My intention is to be instrumental in positioning the business for long-term success.
"I am delighted to welcome Nigel Oddy as the business’ new CEO and am confident Matalan is in good hands."
Elliott Advisors declined to comment when approached by BusinessLive.
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