Wednesday, November 26, 2008

Woolworths file for administration

Woolworths has become the latest victim of the recession

Woolworths, which has been in business for nearly 100 years, has filed for administration [BBC]. Woolworth's was running at a loss and has accumulated more than £385m in debt. Its largest shareholder, property tycoon Ardeshir Naghshineh, called on the retail business to delay a plan to sell the enterprise for just £1 and instead sell some of its 840 UK stores. The £1 offer is said to have come from restructuring firm Hilco. However, both Hilco and Woolworths have declined to comment on whether they were in talks. Shares in Woolworths have dropped some 95% in 2008 and the firm announced a record first-half pre-tax loss of £90.8m in September. In a last ditch attempt to save the company it was announced today [26/11/2008] that Woolworths may sell its stake in a video-publishing venture with the British Broadcasting Corporation. The firm also suspended the trade in its shares which now stand at £1.22. As the company fails more than 30,000 jobs are at risk and another icon of the British High Street may well see its 850 stores disappear [The Times / Bloomberg / BBC].

The news comes as MFI also filed a notice of intention to appoint administrators. The furniture giant has 110 stores across the country and more than 1,000 employees may face redundancy. Earlier the GMB trade union had warned the firm might face the risk of administration if it was unable to agree a rent-free period with its landlords [BBC]. The company which started business in 1964 has been experiencing financial problems for a number of years culminating in a buy out by Merchant Equity Partners who purchased the stores for just £1 in 2006.

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