Woolworths’ biggest shareholder was locked in meetings with advisers last night over how best to fight Hilco’s £1 offer for the company’s retail arm.

It is believed that Ardeshir Naghshineh, who owns 10 per cent of the retailer, has approached advisers to Woolworths’ lending banks, GMAC and Burdale, which is part of the Bank of Ireland, to discuss an alternative deal. Deloitte, the adviser, declined to comment.

Mr Naghshineh, an Iranian entrepreneur, made clear yesterday that he would vote against a low-priced deal with Hilco. Targetfollow, his property development company, said: “Mr Naghshineh is convinced that a much better deal can be brokered that does not underestimate the value of the retail chain. Woolworths is a very strong brand, which he believes has a strong balance sheet.”

Woolworths declined to comment; however, it is understood that it was in talks with Hilco and its lenders over a sale of the retail arm as quickly as possible.

Sources close to Woolworths say that its lenders will force it into administration before Christmas if it cannot do a deal with Hilco and added that it has been pushed to the brink of bankruptcy by the withdrawal of credit insurance to suppliers.

The squeeze, which has affected many of the high street’s most troubled retailers, has left Woolworths unable to operate within its banking facilities. If shareholders vote against the deal, Woolworths’ lending banks could bring in Deloitte as an administrator and sell Hilco the business out of administration, according to City sources.

It is understood that Mr Naghshineh could be working on a plan that would entail Woolworths spinning off its two profitable arms, 2entertainment, a DVD publisher, and EUK, a specialist distribution business, to realise cash, leaving the company with its 840-store high street retail chain.

However, any deal would require the consent of not only the company’s lending banks but also, potentially, its pension trustees. Woolworths has a £100 million pension deficit.

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