MFI saved by bosses’ buyout

Furniture retailer MFI opened for business today following a last-minute rescue deal to fund a management buyout.

Chief executive Gary Favell led the buyout from Merchant Equity Partners, which paid £1 for MFI in 2006.

Under today's deal, MEP will provide MFI with a "substantial cash dowry payment to secure deposits paid by customers."

Like many other retailers, MFI faced a huge quarterly rent bill today. It has 192 stores and employs more than 3000 people.

Favell said: "We have secured the future of the MFI business through this management buyout and have the capital to provide continuity and security for our customers, who continue to support MFI as the largest fitted furniture business in the UK."

He added that sales in recent weeks had been ahead of management targets.

MFI was once valued at more than £1 billion but it has faced increasingly stiff competition in recent years from the likes of Ikea, B&Q and Homebase.

Sun European Partners, which owns competitors Moben and HomeForm, held talks with MEP about a rescue takeover but failed to come up with a deal.

The management buyout was secured over the weekend, with MEP saying it had engineered a profitable exit from its investment.