Troubled MFI kicked off its latest recovery drive with the sale of French business Hygena Cuisines for £92.3 million.
Proceeds from the sale to European kitchen company Nobia will be used to reduce debt as the struggling furniture retailer switches focus to its UK operations.
MFI, which saw its share price slump to a five-year low last month, is in the midst of a strategic review under new chief executive Matthew Ingle after a dramatic fall in sales.
It sells Hygena kitchens in the UK and makes kitchens sold under the Hygena Cuisine brand in France.
MFI will continue to supply Nobia with kitchen furniture for three years after the sale is completed.
Last year Hygena Cuisines made pretax profits of £5.5 million on turnover of £133.4 million.
MFI wants to concentrate particularly on the growth of Howden Joinery and the recovery of its retail arm.
Mr Ingle said: "This is an excellent deal for MFI.
The sale and cash receipt strengthen our ability to focus our efforts on the recovery and growth of the group here in the UK."
MFI has suffered from consumers' reluctance to splash out on big ticket items and kitchens sales slumped last year.
Howden has helped offset the trading woes, and under Mr Ingle's leadership - before he took control of the whole MFI group in October - profits at the subsidiary rose from £9 million in 1999 to £100 million in 2004. But at the end of 2005, group debt still stood at £65 million.
MFI has been facing intense competition from B&Q and Homebase.
News of the disposal comes just over two weeks after MFI said it would receive a £22 million boost after settling a longstanding VAT dispute with HM Revenue & Customs.
The two deals together would appear to significantly reduce the need for a rights issue, which the market has been speculating on for weeks.
The sale to Nobia followed a competitive auction process, managed by Cazenove.
The deal has the support of the Hygena Cuisines Works Council and the business will continue to be managed by Hygena's current management team.
Richard Ratner, analyst at Seymour Pierce, said the £92 million was double what he thought MFI
might get for the business. "We now estimate that MFI will have enough cash to complete a restructuring, although the pension issue still overhangs," he said.
However, he reckons MFI's current trading is "awful... our spies are suggesting 20 per cent down."
Nick Bubb, an analyst with Evolution Securities, said his forecasts of a recovery from a small loss last year to profits of £20 million in 2006 already looked optimistic.