DFS owner Advent International is working towards a refinancing deal that would buy out the last remaining debt interests of its founder Lord Kirkham.

Sources told The Telegraph that the new deal is likely to be refinanced by the existing bank lenders to DFS, who will back the refinancing in return for higher interest margins and fees on their existing facilities.

When the private equity group bought the UK’s largest sofa retailer three months ago for £500m, Kirkham kept a significant financial interest in the retailer through retained equity and a vendor loan note understood to be worth about £200m.

Retail veteran Richard Baker replaced Kirkham when Advent bought the business.