Confirming that their shares are to be immediately suspended from the London Stock Exchange, music retailer HMV announced plans to file for administration. Having battled with debt for the past few years – the brand have been close to bankruptcy on so many previous occasions – the time has now finally come for HMV to admit defeat in a digital dominating market.
Started in 1921, the retailer, whose name is an acronym for His Masters Voice, went from being a record label – on which The Beatles dropped their first ever record on – to a fully fledged music retail machine. However, just like Virgin, Our Price, and MVC before them, the art of downloading music has overpowered the brand.
Reported to have asked suppliers for an extra £300m in funding to help keep them afloat, after which they were told no, the chain which houses 239 stores and 4350 staff will now be run by administrators Deloitte until it assesses the business prospects and finds potential buyers. The firm’s underlying net debt grew to £176.1m (2011: £163.7m) in the six months to the end of October 2012.
A company statement was made earlier this evening which read:
On 13 December 2012, [HMV] 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.