HMV Issues Statement On Entering Into Administration - Read Now
Monday, 14 January 2013
Written by Jon Stickler
The future of High Street retailer HMV looks uncertain this evening. Throughout the day company Directors have been thrashing out options to save the company, including plans to call in administrators as early as tomorrow, Tuesday 15th January.
HMV has been at risk of falling into administration for several years, with increasingly tough competition from supermarkets as well as online retailers such as Amazon and Play.com.
More recently, after a request of £300million as a lifeline for the struggling High Street retailer was declined, Deloitte, which has been advising HMV’s lending banks, looks set to be lined-up as administrator, making HMV the latest big-name high street chain to fall victim to the flagging British economy.
In an effort to buy more time to form a turnaround strategy, HMV has managed to raise tens of millions of pounds by selling assets including London's Hammersmith Apollo music venue and Waterstone's book sellers. However, the efforts all seem to be in vain.
If administrators are called in, it would deal an almighty blow to the future of the British high street. It would also put over 4,000 jobs at risk, however, some of HMV's 230 UK stores could be saved from closure if the company manages to attract a bidder.
HMV's history dates back to 1921, when Sir Edward Elgar, a renowned composer and conductor, opened the chain's first ever store on London's Oxford Street.
The news of HMV's uncertain future comes just days after camera High Street retailer Jessops confirmed its demise, with the closure of nearly 200 shops and the loss of almost 2,000 jobs.
HMV have just issued the following statement:
"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."
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