Hundreds of stores belonging to retail chain Woolworths in the UK are set to be sold off in the coming three weeks to prevent further rental bills.
Potential suitors who have reportedly envisaged interest in buying Woolies retail stores include Primark, Asda and Iceland. Discount chains Aldi and Lidl were also reported to be interested in acquiring some of the well-positioned high street stores.
Administrators of the firm, Deloitte, have appointed real estate management firm CB Richard Ellis (CBRE) to sell the stores. The sale is expected to be an expedited process, with reports suggesting that there is less than a month to go to offload these stores if the company wanted to avoid more costs in terms of another month's worth of rentals.
If that holds true, the administrator would need to find buyers and secure deals before Christmas. Reports suggested that the coming three weeks would be rather busy for the administrators, as rental payments are most often made for a quarter. This time, however, there would be not stock or funds to pay the rent, and hence the pressure would be on to complete the job in under a month.
There was widespread sadness for the retail group's 30,000 employees, with the UK prime minister Gordon Brown pledging government support to help ensure that staff were paid, and those laid off would find other jobs.
Reports also suggested that BBC Worldwide had agreed, albeit in principle, to pay over £100 million to Woolworths. 2entertain, a publisher of DVDs including those of Doctor Who and the Blue Planet, is a 60:40 joint venture between BBC's commercial arm and Woolworths.
The stake sale to BBC Worldwide was put forth by Woolworths' directors as part of a broader transaction to see the 800-store retail chain sold to restructuring specialist Hilco UK. Woolsworths has Burdale and GMAC as its lead creditors, and has a around £385 million of debt. Both lead creditors are reported to be in the decision making phase whether to approve the plan, having lent Woolworths £385 million in January.
While the BBC agreed in principle to acquiring the stake at around half the valuation from less than 12 months ago, it still has to undertake a due diligence exercise, and get it approved from the BBC Trust. Deloitte was finally appointed as administrator for Woolworths, after Hilco failed to buy Woolworths' stores and assume the major share of it £385 million debt. 2Entertain, is not in administration.
Retailer Iceland was reported to have shown interest in buying stores from the administrator, Deloitte. The Financial Times quoted Deloitte's Neville Kahn, the administrator, as saying that with both the retail and EUK, inquiries are flooding in, with buyers ready to buy the business as a business, and some who want to buy stores.
Woolworths had opened its first store in the UK in Liverpool in 1909. It saw its customers migrate to supermarkets and the internet to gain better value, driving its sales below ground level.