HMV is to enter administration, after a final desperate attempt to refinance the company failed last night (Monday 14 January).
Deloitte, which had been advising HMV’s principal lenders, has been appointed as administrator and the company announced its shares had ceased trading on the London Stock Exchange.
HMV had warned in December it would breach its banking covenants by the end of the January. Since then, it had been in talks suppliers to raise £300m of additional funding to clear its debts and fund a restructure of the company.
“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,” a company statement said.
The administrators – Deloitte partners Nick Edwards, Neville Kahn and Rob Harding – are charged with finding a buyer for the beleaguered group.
This may prove difficult, as HMV has seen its sales falling away since they peaked in 2009, following the closure of high street giant, Woolworths.
In August, Insolvency News reported [http://www.insolvencynews.com/article/14252/corporate/hmv-announces-16.2m-loss-and-4.4m-loan-deferral] the retailer had suffered a like-for-like drop in sales of 12.1% for the full year to 28 April 2012 and a loss before tax of £16.2m, compared to a profit of £17.6m for the same 12 month period in 2011.
The retailer failed to recognise the threat posed by downloads and online retailers and in bid to keep its position as the UK’s largest retailer, a year ago, its suppliers took a 5% equity stake in the company.
The administration places 4,000 jobs at risk across the group’s 230 stores.
By Padraig Floyd