11/24/2008 11:57:00 AM
Woolworths searches for rescue to avoid collapse
Woolworths is entering arguably the most critical week in its 130-year history as the company faces possible collapse if it fails to find buyers to take on its stores, and its debt.
Collapse is anticipated if Woolies management fails to find a buyer for the retail business.
A £1 offer was made on Friday by restructuring firm Hilco. This was rejected by shareholders some members of the board at Woolworths are pushing the offer in an effort to save the business.
The token £1 fee reflects the £270m debt that would accompany an acquisition of the 800-store business. Woolworths is now looking at creating a resolution which would see the business fall into administration, leaving the company to retain its more successful EUK distribution business, as well as the 2Entertain productions company it has a 50% stake in with the BBC.
Woolworths made a £90.8m loss in the first half of the year, with bankers behind the company owed just under £400m.
There are 30,000 employees at Woolies, which also has 10,000 members with regards to its pensions.
The company started offering a £20 gift card on any mobile phone that cost over £49.99 this weekend in a bid to kick-start sales. The deal does not appear to have been linked to a particular network.
The Christmas run-up is traditionally the period that sees Woolworths generate the majority of its sales. The company has previously said it makes 90% of its sales in the final six weeks of the year.