SFI Group debts top £150m

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Troubled bar group SFI has revealed its debts now stand at £151.2m. Banks have withdrawn support from with other managed house businesses such as...

Troubled bar group SFI has revealed its debts now stand at £151.2m.

Banks have withdrawn support from with other managed house businesses such as Old Monk Company and Po Na Na, but the scale of SFI's borrowings means backers cannot afford to call time.

However the scale of SFI's debts does mean the banks will be in control of the business for the foreseeable future.

The company has been investigating its accounts since its financial implosion last October, when it emerged that SFI had run out of cash.

A letter to shareholders yesterday unveiled a catalogue of errors and mistakes. Money invested in the business in the year to May 2002 exceeded forecasts by £12m, and capital expenditure in the eight weeks from June 2002, was £4m over budget.

The company, which even forgot to account for staff wages and bonuses, owes a further £6.7m in unpaid interest and bank fees.

While the debts continue to spiral upwards, the value of the SFI pub estate is shrinking.

The company is already revising the worth of its pub operations but diminishing performance means the value is set to fall further.

The result may see SFI's bars worth just half its debt. "It's one of the unfortunate spirals," said executive chairman Stuart Lawson. "A weaker performance leads to re-evaluations."

Mr Lawson was parachuted in to SFI three months ago. A rescue specialist, he replaced SFI's previous boss Andrew Latham, who stepped down to managing director in June and has now been made redundant.

The value of SFI's pubs is yet to be determined and re-evaluations may also mean that profit figures reported in the last three years need to be adjusted.

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