Shares in Woolworths were hit today after it emerged its lenders had drafted in corporate restructuring specialist Deloitte as an adviser amid mounting concerns over the retailer.
Burdale Financial, a division of the Bank of Ireland, and GMAC Commercial Finance agreed a £385 million loan to Woolworths last January, which is secured against a range of assets including much of the retailer's stock.
As part of the arrangement the lenders are entitled to review the business plan every year. They assigned Deloitte last week to represent them in negotiations before the retail group's plan for the next financial year is finalised in December.
Woolworths said the appointment was as expected. A spokeswoman said: "We are working as normal with our lenders who continue to be supportive.
"We remain within all of our [banking] facilities. The board of Woolworths Group is comfortable with the financial and cash position of the company."
Deloitte held discussions with KPMG, which is advising the retail group about its business and budgeting plan, last week.
Last month Woolworths reported losses of almost £100 million for the six months to the start of August and sales were down 3.2% on a like-for-like basis for the same period.
The group said the results highlighted the "operational issues and strategic challenges" faced at its retail arm.
Some analysts expressed concern about the retailer's future, with Seymour Pierce saying "there are no easy win strategies for Woolworths".
Steve Johnson, the new chief executive of Woolworths and former Focus DIY boss, is expected to announce a new strategy for the business after Christmas. Last week he oversaw management changes, including the appointment of new finance director Robert McDonald and the departure of some senior executives.
If Mr Johnson manages to get the share price back above 20p he stands to earn £8 million.
The share price fell more than 7% to 3.4p at one stage of trading this morning.
Woolworths was founded in the UK in 1909, opening its first store in Liverpool. It has around 800 stores in the UK.