High Street retailer HMV has confirmed that they are preparing to enter into administration, with 235 stores, and over 4,000 employees, now at risk. According to a report by the Financial Times, the retailer asked suppliers for £300 million to keep the company moving forward, a request apparently denied.
The news was announced last night (see the statement below), and was followed up this morning by confirmation that the chain of stores will remain open as a potential buyer is found. Deloitte (who also handled the administration for Comet), are set to oversee HMV's period of administration. The sale of the company's shares on the London Stock Exchange has been suspended.
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.