HMV is set to enter administration, after a final attempt to refinance the company failed last night.
HMV’s principal lenders have appointed administrators and as a result the company has announced that its shares have ceased trading on the London Stock Exchange with immediate effect.
HMV had previously warned in December 2012 it would breach its banking covenants by the end of the January 2013. Since then, it had been in discussions with suppliers to raise additional funding amounting to £300m to clear its debts and to fund a restructure of the company.
The company has released the following statement:
“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 administrators will now be looking to find a buyer of the HMV group in an attempt to save 4,000 jobs across 230 stores. However this potential sale may prove difficult, as HMV has slowly seen sales drop since they peaked in 2009, showing harrowing similarities of the closure of the high street giant Woolworths.
Reports indicate that the retailer had suffered a consistent drop in sales of 12.1% for the year to 28 April 2012 and a loss before tax of £16.2m, compared to a profit of £17.6m for the same 12 month period in 2011.
It is thought that the current circumstances have been brought about by the retailer failing to acknowledge the threat posed by online retailers.
See original article at: http://www.insolvencynews.com/