26 November 2008
Galiform notes that the company set up by the management of MFI Retail Limited to enable a management buyout (MBO) of the MFI business, MFI Group Limited, has filed a notice of intention to appoint administrators. Galiform is the guarantor of the rent and associated costs payable under the leases of 46 properties that were occupied by the MFI Retail operations, of which the MBO were occupying around half.
The final outcome and liability for Galiform remains unclear. However, given that MFI Group Limited is intending to go into administration, it is more likely that Galiform will be required to pay costs in relation to all of the 46 guaranteed properties. The aggregate annual net rentals and associated costs payable in respect of these properties, which we will continue to seek to mitigate, were set out in our announcement of 30 September 2008 *.
Galiform is saddened by these developments. As part of the sale of MFI Retail to Merchant Equity Partners in September 2006, which involved around 200 MFI stores, Galiform provided substantial funding and operational support to the business, including cash payments totalling £65 million, the supply of products for the period to the end of 2007 and the provision of IT services until October 2008. Galiform also retained responsibility for the accrued pension entitlements of MFI employees at the time of the sale. Following the MBO, Galiform has paid rent under its guarantees on a number of stores which the MBO is occupying.
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Notes to Editors