Matalan moves to sell off HQ

-, UNITED KINGDOM - 2020/03/04: Matalan logo seen at one of their retail store branches. (Photo by Keith Mayhew/SOPA Images/LightRocket via Getty Images)

Matalan is seeking to raise nearly £30m ($37.6m) in cash from the sale of its headquarters, as high street chains reel from the impact of coronavirus shutdowns.

The Sunday Times reported that critics of founder John Hargreaves say the multimillionaire is looking to avoid pumping more of his own cash into the chain.

The office, which is located on an industrial estate near Liverpool, is being marketed at £28.5m. The deal is reported as being a sale and leaseback.

As lockdowns set in, the clothing chain furloughed more than 11,000 of its workers under the government’s jobs retention scheme and borrowed more than £25m.

Hargreaves has pledged to pump £25m into the business if Matalan owes more than a combined £50m through government loans and its revolving credit facility by the end of 2021.

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“John Hargreaves is a canny operator. His pledge to put in £25m of equity sounds good, but it looks more like a back-up plan if the sale of the office doesn’t go through,” CreditSights analyst Neill Keaney told The Sunday Times.

In March the chain requested a three-month rent holiday, alongside other retailers such as New Look and Monsoon Accessorize.

Companies have been fighting for their lives, as government lockdowns shut all non-essential retailers.

This week figures were released showing the UK’s economy shrank by 20.4% in April - the largest monthly contraction on record - as the country spent its first full month in lockdown.

Matalans across the country reopened this weekend after a change in government guidance took homeware out of the non-essential category. More shops are set to open June 15.