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MFI properties to go into administration as more than 100 MFI stores at risk of closure
More than 100 MFI stores are expeced to close despite an 11th hour management buy-out of the stricken furniture chain.
The management team led by Gary Favell, the current MFI chief executive, then intends to take back 92 of the most profitable stores.
The move could lead to hundreds of job losses across the country. MFI employs more than 3,000 staff.
Mr Favell has told landlords that unless they agree to a three-month rent holiday, their store will be among the closures.
UK kitchen maker Galiform Plc, which spun off ailing UK retailer MFI two years ago, said it was unsure whether liabilities for MFI properties will revert to the company, but that it had adequate funds available.
Galiform is the guarantor of rent and lease costs of 46 properties occupied by MFI, Galiform said the annual net rentals payable for the 46 properties would be £14.7 million, with net business rates of around £6 million and other costs of up to £2.5 million a year, and that it has come up with a mitigation plan for any financial impact related to possible liabilities.
Galiform also said it was confident Howden Joinery - the banner under which the company operates - was well placed to service any local opportunities arising from MFI's potential restructuring.
The furniture sector has been hit hard by the consumer downturn. ScS Upholstery, the sofa chain, went into administration before Sun European Partners bought the trading operation for a negligible sum.
MFI is understood to have also considered a merger with Homeform, a British rival that owns Moben Kitchens, or Magnet, but talks came to nothing.
The management team led by Gary Favell, the current MFI chief executive, then intends to take back 92 of the most profitable stores.
The move could lead to hundreds of job losses across the country. MFI employs more than 3,000 staff.
Mr Favell has told landlords that unless they agree to a three-month rent holiday, their store will be among the closures.
UK kitchen maker Galiform Plc, which spun off ailing UK retailer MFI two years ago, said it was unsure whether liabilities for MFI properties will revert to the company, but that it had adequate funds available.
Galiform is the guarantor of rent and lease costs of 46 properties occupied by MFI, Galiform said the annual net rentals payable for the 46 properties would be £14.7 million, with net business rates of around £6 million and other costs of up to £2.5 million a year, and that it has come up with a mitigation plan for any financial impact related to possible liabilities.
Galiform also said it was confident Howden Joinery - the banner under which the company operates - was well placed to service any local opportunities arising from MFI's potential restructuring.
The furniture sector has been hit hard by the consumer downturn. ScS Upholstery, the sofa chain, went into administration before Sun European Partners bought the trading operation for a negligible sum.
MFI is understood to have also considered a merger with Homeform, a British rival that owns Moben Kitchens, or Magnet, but talks came to nothing.
Tue, 30th Sep 2008