The Times as reported that MFI is understood to be in urgent talks with lahndlords just days after starting a search for emergency funding.
MFI is believed to be fighting to secure new terms ahead of its quarterly rent bill on Monday. A source familiar with the talks said that Merchant Equity Partners (MEP), the private equity group that bought MFI for a nominal £1 two years ago, wanted to change at least some of the leases on MFI stores so that it could pay rents on a monthly basis.
A spokesman for MFI said: “All I can say is that Merchant Equity Partners is continuing to review strategic options for the business.”
The furniture sector has been among the hardest hit by the fallout from the credit crunch. Willis Gambier, an Essex-based supplier to John Lewis and Marks & Spencer, fell into administration yesterday. PriceWaterhouseCoopers is looking to sell the supplier, which employs more than 130 staff, as a going concern.
John Lewis is expected to reveal that sales fell sharply last week after the big falls on stock markets on both sides of the Atlantic.
An industry source said: “In a slowdown like the one we’ve got at the minute it’s the big ticket items that consumers cut down on first. Who’s going to spend £4,000 on a new kitchen in this environment? Also, MFI is an extremely competitive market with the big DIY sheds such as B&Q.”
MFI hired Kroll Talbot Hughes, the corporate restructuring expert, two months ago. At the time, MEP insisted that Kroll had been brought in to bolster the retailer’s “under-resourced finance function”.
At the weekend it emerged that MEP had hired Argyll to find investors that could pump money into the business. MEP is reported to have been in talks with other retailers over the past month about forming a partnership. These include Homeform, which owns Moben Kitchens, and Nobia, which owns Magnet Kitchens.