Report: Woolworths talks at critical stage

Efforts to rescue the stores arm of Woolworths in the UK are close to collapse after the retailer’s lenders refused to sign up to a deal, it was reported today.

Talks involving a syndicate of lenders were said to have gone on into the night after the retailer confirmed on Wednesday it was in talks over a possible offer, fuelling speculation its 800-store retail chain could be sold to Hilco, the restructuring specialist, for a nominal £1 (€1.18).

The Daily Telegraph reported the syndicate of lenders, led by Bank of Ireland subsidiary Burdale Financial and GMAC Commercial, were holding out on the deal. However, executives close to the negotiations told the paper they were hopeful there was still a chance of an agreement.

But they warned that both the deal and Woolworths were now “teetering on the brink of collapse”, according to the newspaper.

Hilco would take on about £250m (€296m) worth of Woolworths’ debt as well as the stores business as part of the deal, the report said.

A retail deal would leave Woolworths with EUK, its entertainment wholesale division, and 2Entertain, the music and video publishing venture with the BBC.

Woolworths, one of the UK’s best known chains, has been a presence on UK high streets for nearly 100 years but has been battered by competition from supermarkets and internet retailers.