Woolworths shares suspended as rescue talks continue

Shares in High Street chain Woolworths have been suspended as the retailer continues talks to save the business.

Woolworths shares have plummeted by 92% in the last year (falling 32% last Friday) and it has debts of £385 million. Shares have been suspended at 1.22p, after falling almost 9% yesterday.

In a statement, the group said it is in talks about the possible sale of its 800 plus stores.

Restructuring group, Hilco, has offered to buy the shops for £1 and take on approximately £265 million of the group’s debts but the offer was rejected.

According to sources familiar with the situation, Woolworths is running out of cash amid challenging conditions in the retail industry, and it is believed that the company only has sufficient funds to last until about the middle of December. Consequently, the retailer could be put into administration.

Meanwhile, it is understood that Woolworths is in talks to sell its 40% stake in publisher 2 Entertain to BBC Worldwide, the BBC’s commercial arm, which already owns the other 60%.

However, any deal is subject to approval by its banks.

It was revealed yesterday that Woolworths’ major shareholder, property tycoon Ardeshir Naghshineh, who holds a 10.2% stake, is proposing a deal that would allow him to sell 200 of the High Street stores and use the funds from the sale of the leases to give the remaining sites a facelift.

The company, which has been around for nearly 100 years, is valued at £18 million, 95% less than its debts of £385 million. It has 840 high street shops and a workforce of 30,000.

For some time now, the retailer has been struggling as it faces competition from large supermarkets and the internet.

In September, Woolworths announced a record first-half pre-tax loss of £90.8 million and scrapped its dividend to shareholders.

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