Wednesday November 26, 11:37 AM
Woolworths shares suspended as British retailers face crisis
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LONDON (AFP) - Shares in one of Britain's best-known high street retailers, Woolworths (Munich: 886853 - news) , were suspended here on Wednesday amid talks to rescue the firm, the company said.
The crisis at the nearly century-old chain, known for cheap household goods, clothing and toys, came as another troubled group, furniture retailer MFI, fought for survival in a row over rents, according to media reports.
British retailers are struggling with falling demand as consumers tighten their belts amid the looming threat of recession.
Woolworths said on Wednesday that it was in discussions over the possible sale of its stores, as well as a 40-percent stake it holds in 2 Entertain -- a publishing joint venture with BBC Worldwide.
"Whilst discussions in relation to such sales are being pursued with vigour, terms have not yet been agreed," Woolworths said in a statement.
"Both sales are subject, amongst other things, to the approval of (Woolworths') lending banks. Accordingly there can be no assurance that a sale of the .. retail business or of its interest in 2 Entertain will be concluded."
Meanwhile, MFI was reported to be on the brink of collapse, putting 1,500 jobs at risk in the chain's more than 100 stores, according to the Daily Telegraph.
"We have just days to resolve this," an executive told the paper, which added that an unnamed administrator was understood to be ready to take control of the MFI if talks with its landlords failed.
MFI chief executive Gary Favell led a management buy-out of the firm in September, but within days it emerged that he was seeking a three-month rent-free period from landlords.
This week, the British government announced a stimulus package amounting to 20 billion pounds (30 billion dollars, 23 billion euros) in a bid to reignite consumer spending amid a global economic slowdown.
The government will slash sales tax, or value-added tax (VAT), on goods and services from 17.5 percent to 15 percent from December 1.
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