Thursday evening business bulletin

Jul 3 2008 By Andrew Mernin

Shareholders in struggling furniture chain ScS Upholstery are set to be left empty-handed after the group was placed in administration today and its trading arm sold to private equity.

The Sunderland-based company said that it was ``unlikely" investors would receive a payout for their shares under the rescue deal.

But 1,300 jobs will be saved by the sale of its trading arm to an affiliate of US-based buyout firm Sun Capital Partners, called Parlour Product Holding.

The deal will also see its 96 stores remain open, with administrators confirming it will ``business as usual for employees, customers and suppliers".

ScS has been hit by consumers reining in spending on ``big ticket" items since last summer’s credit crunch, with plummeting sales leaving the group in need of extra funding.

Hopes of pub and brewing group Greene King converting to a tax-friendly real estate investment trust cheered investors today despite a recent sales slide.

Suffolk-based Greene King blamed tightening consumer budgets for a near 3% like-for-like sales dip at its core managed pubs and restaurant arm during the past two months.

But the group also revealed detailed discussions with HM Revenue and Customs (HMRC) had taken place about switching to REIT status - enabling a tax exemption on property profits, allowing for higher dividend payments.

HMRC advised the move could be made without demerging the group’s managed pubs arm, the group said, but directors still needed to be convinced it would deliver ``real long-term economic value".

Greene King - which operates nearly 1,800 managed and tenanted pubs across the UK - reported pre-tax profits of £142 million for the 53 weeks to May 3, up 2% from prior year. Shares were up 5% after the announcement.

Administrators today blamed rising fuel prices for the collapse of a haulage firm which threatens to put 300 people out of work.

Leeds-based Macfarlane Transport, which is a £20m business, ceased trading this week, according to administrators KPMG.

They said the business had been hit by rising fuel prices and a competitive market place which had put its margins ``under unsustainable pressure".

One of the joint administrators, KPMG restructuring partner Richard Fleming, said: ``A going concern sale of the business has been energetically sought but was not achievable.

``It’s very unfortunate that this long-established business has been unable to survive and that large-scale redundancies will be inevitable as a result."

The firm employs 300 people and runs more than 100 trucks from its base in Cross Green, Leeds.

Its fleet of lorries, with their green and yellow livery, are one of the most recognisable haulage brands on Britain’s roads.

The pound at 4:30pm was US$1.9823 compared to US$1.9930 at the previous close while the euro at 4:30pm was £0.7927 compared to £0.7964 at the previous close.