LONDON (AP) - Shares in Woolworths Group PLC plunged 32 percent Friday on rising market concerns the company might not be able to sell its debt-ridden retail business because of a lack of support from investors.
Shares in Woolworths, hit hard by a slowdown in consumer spending amid the economic downturn, lost 31.9 percent to close at 1.43 pence ($0.02) on the London Stock Exchange.
The fall came after a newspaper report that a syndicate of Woolworths' lenders led by Bank of Ireland subsidiary Burdale Financial and GMAC Commercial — who loaned the company 385 million pounds ($574 million) in January — have refused to back a fire sale of Woolworths' debt-laden retail business.
The report said they would prefer getting their money back by selling the company's assets outright.
Woolworths' shares have now fallen 61 percent since Wednesday, when the company confirmed that it was considering selling its chain of 815 retail stores to restructuring specialist Hilco for a reported nominal fee of 1 pound ($1.50).
A sale would have transferred around 250 million pounds ($376 million) of Woolworths' 380 million pounds ($571 million) in debt to Hilco along with the whole store chain, according to a report in the Daily Telegraph newspaper on Friday, which did not name its source.
The debt transfer would have saved jobs at the chain of stores and allowed Woolworths to continue operating its two smaller, still profitable units: entertainment products distributor EUK and BBC program distributor 2 Entertain. In the last financial year, which ended in April, those two businesses made about 40 million pounds ($60 million) of profit before tax and interest.
Woolworths and Hilco both declined to comment on the report.
In August, Woolworths rejected a 50 million pound ($75 million) offer for its retail stores, which sell electrical goods, home wares and computer games, from Iceland Foods Ltd.
Britain's Woolworths was founded in 1909 as part of the U.S. chain, but the two no longer have any link. The company is also not related to Sydney-based Woolworths Ltd. or South Africa's Woolworths Holdings Ltd. |