Woolworths' largest shareholder is determined that the struggling group should not be forced into administration, and is trying to derail plans to sell its 800-plus shops for a nominal price.
Iranian property tycoon Ardeshir Naghshineh, who owns just over 10 per cent of the business, says the proposal to offload the chain of stores to restructuring specialist Hilco for as little as £1 is not in the interests of either shareholders or staff, and that there are other options. He yesterday discussed with Woolworths' banks – Burdale and GMAC – a proposal to sell some of the group's leases as a way to realise some assets and generate short-term cash flow before the busy Christmas period.
Mr Naghshineh said: "Woolworths has a very strong balance sheet, and its retail division enjoys a unique place on the high street, with one of the best loved and recognised brands.
"The banks have now said to me that they have open minds and want to pursue this in further talks, this time involving the company. This was the first time that an alternative business plan has been put to them, and I am pleased they are prepared to listen."
The discussions with Hilco have been going on since last week. Under consideration is a deal which would see Woolworths' shops sold off, while the group's DVD publishing and distribution businesses would continue to trade. The deal would include the group's £286m-worth of debts, as well as £160m per year in rents and, potentially, its £58m pension deficit.
Woolworths has had a tough year. In September it posted a first-half pre-tax loss of £91m and scrapped its dividend, prompting City speculation about whether it could continue as a going concern.
The company then rejected a takeover offer from a consortium including troubled Icelandic retail giant Baugur that valued the retail arm at £50m. There have also been major management upheavals amid the downturn in consumer spending. Following the announcement of the Hilco offer last week, the stock lost a spectacular 40 per cent to close at 2.35p. Yesterday the price dropped another 6.4 per cent to close at 1.34p, despite the possibility of a rescue package spearheaded by Mr Naghshineh.Reuse content