The Bookseller.com

9th January 2009

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'Wobbly' Woolworths faces debt fears

10.12.07

Struggling high street retailer Woolworths is under pressure to renegotiate its debt mountain as it goes into make-or-break Christmas trading, reports the Telegraph. Woolworths' banks are understood to be concerned that they do not have enough security over hundreds of millions of pounds they have lent the retailer. Its shares plummeted to 14.5p last week after an investment bank gave warning that its core retail business was worthless.

In the past few weeks the retailer has hired KPMG to switch to a new debt package that will give the banks security over their loans and to find it some new lenders. The company says that it has been planning the move since September because this kind of asset-backed borrowing is cheaper than its current arrangements. Woolworths adds that it will drop plans to refinance if the credit crunch makes it impossible to get a better deal.

A Telegraph comment adds: "A senior City figure tells us that he expects 10 retail chains to go bust by Christmas Eve. This sounds punchy to me; I reckon that chains are more likely to go under in early January after their rents are called in. However, it is fair to say that a lot of people are getting nervous."

Telegraph

Retail Financial woolworths Christmas