By ZILLA EFRAT

PROTEA Furnishers (Profurn) has struck a highly favourable deal with First National Bank to buy back its furniture financing business, including its debtors' book and staff.

The deal, worth about R270-million, will result in FNB being Profurn's largest shareholder, with 22% of its equity.

FNB last year sold back McCarthy Retail's book, which reduced the critical mass of FNB's furniture bank, FirstPref.

Profurn chairman Gerald Rubenstein says: "We have struck a good bargain for ourselves."

The purchase price is at a 36% discount of the value of Profurn's debtors' book. This book is now 50% bigger than it was when Profurn sold it to FNB 15 months ago for R190-million.

The purchase price will be settled by R100-million in cash, funded by a loan from FNB at a preferred rate, and the issue of approximately 140-million Profurn shares at 120c a share which FNB must hold for seven-and-a-half years.

If during this period a buyer is found for these shares at a price of 263c a share - more than double the current share price of 126c - the purchase price of the deal will be reduced by a further R100-million. If this happens the purchase price becomes R170-million - a 60% discount on the gross value of Profurn's debtors' book.