Ardeshir Naghshineh, the largest Woolworths shareholder, is making a last-ditch attempt to stop a sale of the company’s retail arm to Hilco for £1.

The property tycoon, who met Woolworths’ lenders yesterday, said: “The banks have said to me that they have open minds and want to pursue this in further talks, this time involving the company.

“This was the first time that an alternative business plan has been put to them and I am pleased that they are prepared to listen.”

However, Steve Johnson, Woolworths’ chief executive, did not attend a planned meeting with Mr Naghshineh yesterday because he was in emergency talks with the banks.

The problems at Woolworths have snowballed in recent weeks as credit insurers have refused to cover its suppliers and it has been denied credit. Sources close to the retailer’s lenders say that it is running low on cash and could be put into administration within days.

Woolworths’ lenders must reach agreement on any deal with either Mr Naghshineh or Hilco. Mr Johnson has told the lenders that he will put the company into administration rather than risk trading in a position of insolvency. Hilco is believed to want a deal by tomorrow.

Mr Naghshineh, who owns 10 per cent of Woolworths, is proposing a deal that would allow him to sell 200 of the chain’s 840 high street stores and use the money from the sale of the leases to give the remaining sites a more upmarket image.

Mr Naghshineh said: “Today’s negotiations build on the underlying value of the company. Woolworths offers great value and convenience and is a very strong brand, which enjoys tremendous public goodwill.”

Shares in Woolworths fell by a further 6.29 per cent yesterday to 1.34p, suggesting that the market believes there is little hope for Mr Naghshineh’s plan unless he can win over the lenders. The company is valued at £18 million – 95 per cent less than its £385 million debt burden.

Deloitte, which is advising the banking syndicate led by GMAC and Burdale, a division of the Bank of Ireland, declined to comment.

Woolworths, which has had a presence on the British high street for nearly 100 years, also declined to comment. However, a source close to the company poured cold water on Mr Nagshineh’s chances of success. “The board would not be in these talks with Hilco and the banks if they felt there was something they could just do themselves.”

Mr Naghshineh believes that Woolworths can survive without the Hilco deal. He said: “Woolworths has a strong balance sheet and its retail division enjoys a unique place on the high street, with one of the best-loved and recognised brands.

“Although the Woolworth stores are the most visible aspect of the company’s activities, it also has profitable assets in logistics services to other retailers and in media distribution.”

Woolworths remained locked in parallel rescue talks with its lending syndicate yesterday and discussions are expected to continue today.

The retailer has 30,000 employees and job losses are inevitable, whether Hilco buys the stores or the whole group goes into administration, as Hilco almost certainly would close some outlets.

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