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HMV on the rocks: retail giant enters administration, stores still open for business

£300 million bailout request falls through

UK electronics and entertainment retailer HMV has announced that it will enter administration today, after revealing that it will be unable to honour debt payments due by the end of January. Around 4500 jobs and over 200 stores are at risk.

Update 1: Eurogamer reports that all existing HMV preorders will be honoured. Phew.

Original story continues: According to the Financial Times (via MCV), the firm sought a bailout totalling £300 million last night from suppliers, including Universal Music, EMI, Warner Brothers and Disney. The retailer's partners were unwilling to cough up, however, and HMV appointed Deloitte as administrators earlier this morning.

Zoom

Stores remain open as of the time of writing, but gift vouchers and store credit are no longer being accepted. HMV shares have been suspended from the stock market with immediate effect.

Here's the official statement, care of CVG. Best of luck to all affected.

On 13 December 2012, the Company announced that as a result of current market trading conditions, the Company faced material uncertainties and that it was probable that the Group would not comply with its banking covenants at the end of January 2013. The Company also stated that it was in discussions with its banks.

Since that date, the Company has continued the discussions with its banks and other key stakeholders to remedy the imminent covenant breach. However, 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.

It is proposed that Nick Edwards, Neville Kahn and Rob Harding, partners of Deloitte LLP, will be appointed as the administrators of the Company and certain of its subsidiaries.

The Company's ordinary shares will be suspended from trading on the London Stock Exchange with immediate effect.

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