HMV calls in the administrators
In a statement issued last night, the company said it had ceased trading its shares and that it would appoint Deloitte as administrators.
HMV, which has 238 stores in the UK and Ireland, said in a statement: “The board regrets to announce that it has been unable to reach a position where it feels able to continue to trade outside of insolvency protection, and in the circumstances therefore intends to file notice to appoint administrators to the company and certain of its subsidiaries with immediate effect.
“The directors of the company understand that it is the intention of the administrators, once appointed, to continue to trade whilst they seek a purchaser for the business.”
HMV issued a statement in December warning that it was likely to breach its banking covenants at the end of January and that it was in discussions with its lenders.
The warning followed 10.2% fall in like-for-like sales and a rise in net debt to £176.1 million in the 26 weeks to 27 October. Last year, HMV sold off several parts of its business in an attempt to reduce its debt. This included the sale of its Hammersmith Apollo live music venue for £32 million and the Waterstones book chain.
HMV began a month-long 25% off sale last week as it looked to boost sales following a disappointing Christmas trading period. There were also reports in the last few days that the company’s suppliers including music labels, game makers and film companies, had refused a request for a £300 million credit line to pay off HMV’s bank debt, and fund an overhaul of the company’s business model.
HMV is headed up by chief executive Trevor Moore, who joined the company last September from the Jessops camera chain which itself went into administration last week. In the same month, the company appointed former Carphone Warehouse CFO Ian Kenyon as its new group finance director.
Founded in 1921, HMV has struggled against tough high street conditions and the rise in internet downloads in recent years. The company has attempted to revive its fortunes over the last year by switching its focus to selling specialist music and DVDS and technology products such as tablet computers, iPods and headphones.
Last August, HMV forecast it would make profits of £10 million this financial year.
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