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Woolworths in talks to sell retail, BBC JV stake

Posted by retailigence on November 26, 2008

London: Trading in shares of Woolworths Group Plc, the struggling sweets-to-DVDs retailer, were suspended on Wednesday, while talks continued to save the business from collapse. The 99-year-old group confirmed it remains in talks regarding the potential sale of its 800-store retail business to restructuring specialist Hilco UK for a nominal sum. Woolworths said it is also in talks with the ‘BBC’ regarding the possible sale of its 40 per cent interest in the 2 Entertain DVD publishing joint venture with ‘BBC Worldwide’, the broadcaster’s commercial arm.

The Financial Times reported that the BBC has agreed in principle to pay more than 100 million pounds ($153.8 million) for Woolworths’ stake. “Whilst discussions in relation to such sales are being pursued with vigour terms have not yet been agreed,” the group said. “Both sales are subject, amongst other things to the approval of the group’s lending banks. Accordingly, there can be no assurance that a sale of the group’s retail business or of its interest in 2 Entertain will be concluded.”

Woolworths added that pending the outcome of the talks and the consequent impact on the company’s financial position it requested a suspension in the trading of its shares. The sale of both the retail business and the 2 Entertain holding would leave Woolworths with only a profitable distribution business. Burdale and GMAC lent the group 385 million pounds in January. Hilco’s proposal would see it buy Woolworths’ retail division for 1 pound and take on about 300 million pounds of the group debt. If they decide not to approve the sales analysts expect Woolworths’ board will place the entire group into administration, threatening the jobs of 30,000 employees.

Ardeshir Naghshineh, Woolworths’ largest shareholder with a 10.2 per cent stake, said on Monday the retailer should not be forced into administration but should continue as a going concern. He outlined a plan to the lenders which would see Woolworths realising some of its assets through the sale of leases to bring in cash. Woolworths shares were suspended at 1.22 pence, valuing the equity at 18 million pounds.

Sources :- Financial Express


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