HMV announces sale of Waterstone's for Â£53 million
HMV Group has announced that it is to sell its Waterstone's bookstore business for Â£53 million to A&NN Capital Fund Management, which is a fund controlled by Russian billionaire Alexander Mamut.
The deal is expected to be completed by the end of June, the proceeds of which will largely be used to reduce HMV’s borrowing requirements. It will also enable the company to focus more attention on turning the HMV business around and to improving the customer offering, HMV said.
The sale is conditional on shareholder approval as well as consent from HMV’s bank and its pension trustee. HMV said: "There can be no certainty that any transaction will be concluded and a further announcement will be made as and when appropriate."
Mamut already holds a 6.7% share in share in HMV.
HMV put the Waterstones chain up for sale in March and issued its third profit warning in April. The company said the sale represents an "important step towards strengthening the capital structure of the remaining HMV Group".
Simon Fox, HMV Group chief executive said: "We expect this deal to enable the group to achieve a reduction in the group's borrowing requirements, and, in turn, focus on plans for transforming the HMV Group into a broad-based entertainment business."
He continued: "We are extremely pleased to have reached an agreement to acquire Waterstone's and its great heritage," said Mamut. "I believe that our investment and strategy will secure a dynamic future for the UK's largest bookshop chain and I look forward to working with its booksellers in building on the principle of excellent bookselling, which is at the very heart of the business."
HMV also gave a trading update, announcing that sales declined 15.2% year-on-year in the 17 weeks to 30 April. HMV UK and Ireland sales fell by 18.8% and sales at Waterstone’s were down 11.3%. The group said it expected pretax profit for the fiscal year 2011 to be around £28.5 million and net debt at the April 30 year end to be around £170 million.
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