26 November 2008

MFI on the brink

According to the Financial Times, MFI will fall into administration this afternoon.

According to the FT, MFI’s sales went south at a rate of knots last month and so far the company has not managed to get an extension from its landlords. I understand that restructuring specialists MCR are waiting in the wings to be appointed as administrator.

MFI was bought in September for a nominal sum by a management team led by chief executive Gary Favell, who acquired it from Merchant Equity Partners, a private equity house.

If the former furniture giant should plummet, Galiform – whose own shares are not exactly cause for great merriment at the moment – will inherit leases vacated by MFI. Galiform claimed in September that it could cover the £14m-plus annual rent bill on the stores it would gain should MFI fail.

Galiform, who own Howdens Joinery, the specialist supplier to builders (I bet their Christmas party is going to be a laugh-a-minute this year) may think that retailing would be a ‘good thing’ to get more involved with again. They have already taken back 20 of MFI’s stores but would they really want all 46 of the others?

Meanwhile, the staff of MFI face huge uncertainty. The company used to employ over 3000. There has been more than a tad of disquiet in the ranks as Marion John reports in her blog. Several have already left the company and if MCR cannot find a buyer for MFI – and business people looking to buy a huge furniture retailer with a cheap-as-chips reputation are somewhat thin on the ground at the moment – the rest are going to be looking for employment.

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