MFI finds buyers with price 25% down

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The Independent Online
MFI, the furniture manufacturer and retailer, yesterday found institutional buyers and sub-underwriters for all its shares, but only by pricing its flotation at 25 per cent less than it had originally hoped.

The group, which was sold for pounds 715m five years ago in what was then Britain's largest leveraged buyout, will return to the stock market valued at pounds 669m. The offer price is 115p, compared to the target a month ago of 135p-145p.

The share allocation to the executive directors, which was highly geared to the success of the flotation, was drastically scaled back. The venture capital backers will do no better than recoup their original investments.

The disappointing price follows the flop of the offer to the public this week of The Telegraph newspaper group and the abandonment last month of the flotation of the GPA aircraft leasing group.

The unanimous decision to go ahead with the float was taken by shareholders at a crisis meeting at County NatWest at 2.30am yesterday.

MFI's brokers yesterday successfully placed 410.2 million shares with UK and Continental institutions. Institutions also sub-underwrote the offer to the public of 137 million shares.

UK financial intermediaries, including regional stockbrokers, took only 1.25 per cent of the shares. MFI had been hoping they would take up to 10 per cent.

Derek Hunt, chairman and chief executive of MFI, said: 'I'm absolutely delighted. We've shrugged off the management buyout shackles. We're going to be a normal plc again.'

Asda, the supermarkets group that sold all but 25 per cent of MFI in 1987, will receive pounds 73m in cash for its remaining stake. It had written down the investment to pounds 2m.

Most of the pounds 545m proceeds of the sale will go to pay off debt. When stock market dealings begin on 17 July, MFI will have debts of about pounds 100m.

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