Talks to save Woolworths continue

Emergency talks to save Woolworths from administration were expected to continue today as a revised rescue deal was drawn up, it was reported.

Hilco, the restructuring specialist said to be interested in buying the retailers’ 800-store business arm for a nominal £1 (€1.8), is thought to have sweetened its offer by saying it would assume a greater share of Woolworths’ debt.

The Sunday Times reported that Hilco tabled a last-ditch offer at the weekend to take on up to £300m (€354m) of the group’s debts, leaving lenders with just £85m (€100m).

Last week the syndicate of lenders, led by Bank of Ireland subsidiary Burdale Financial and GMAC Commercial, held out on the deal in which Hilco was reported to have offered to buy the shops for £1 and assume about £265m (€312m) of Woolworths’ debts.

The newspaper said unless a deal was reached in the next few days, the group could fall into administration – putting 30,000 jobs at risk.

It said that even if the deal goes ahead, Hilco might initiate a “pre-pack administration” the stores business, which would enable it to cut the operation down to a smaller sustainable chain.

Woolworths confirmed on Wednesday it was in talks over a possible offer. A spokeswoman for the retailer refused to comment on the talks but it is believed they will go on until at least today and a positive outcome is by no means certain.

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.

It reported half-year losses of almost £100m (€118m) in September, as it warned its retail arm faced “operational issues and strategic challenges”. The company reported a net debt position of £295m (€312m) in August.