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HMV will enter administration tomorrow, potentially signalling the end for the nearly century-old high street chain.
Earlier today, the Guardian reported that HMV’s board members had called on Deloitte to administer the chain. HMV has since confirmed the news in a statement:
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.
Deloitte was also responsible for overseeing Comet’s demise in December, which resulted in a total shut down with all jobs cut.
UK media including the Telegraph and Channel 4 suggest administration will begin on Tuesday morning.
HMV had made a last effort to avoid bankruptcy in requesting £300 million in credit from its suppliers, following on from £40 million pledge last month. The chain was valued at just £14 million, and publishers and labels declined the second, heftier request.
US private-equity firm Apollo Global Management had been earmarked as a potential saviour, but the Independent now cites an anonymous source for word that the company has no plan to increase its 6% stake in HMV;s debts.
The HMV Group has operations in the UK, Hong Kong and Singapore, and employs between 4,000 and 4,500 staff at its 235 stores and offices.
In operation since 1921, HMV is responsible for 27% of all DVDs and Blu-Ray discs and 38% of the physical music market in the UK.
