Banks delay financial tests for under-pressure HMV
Embattled retailer HMV Group said today that it had secured more time in its battle for survival, despite issuing a third profits warning this year.
The company, which owns 731 HMV, Waterstone's and Fopp stores, said its banks had agreed to put back financial tests from the end of April to the beginning of July.
The agreement was negotiated after HMV presented its plans to secure the future of the business, which are understood to include the potential sale of book chain Waterstone's. However, the company said negotiations were still ongoing.
The extension came as HMV warned for the third time this year it would miss profit expectations as trading continued to suffer last month.
The company said pre-tax profits would now be around £30m (€34.1m) - down from a previous estimate of £38m (€43.2m) at the beginning of last month.
HMV Group, which is closing 60 stores over the next 12 months and shedding jobs, aims to cut costs by another £10m (€11.4m) a year.
It saw sales plunge 13.6% in the UK and Ireland over Christmas and has since been hit by supplier troubles as firms struggle to gain credit insurance due to fears over HMV's trading.
The group said trading conditions have remained difficult since its last trading update at the beginning of March.
But its banking facilities "remain fully available" and lenders continue to be supportive, the group said.
The company is likely to see the time extension as a vote of confidence in the proposals it has presented to the banks.
HMV recently confirmed it was "exploring strategic options" for both Waterstone's and HMV Canada but said no discussions were taking place about an offer for the whole group.
It is understood HMV needs to raise £75m (€85.3m) in return for a relaxation of its lending covenants.
Potential buyers for Waterstone's are rumoured to include founder Tim Waterstone and Russian billionaire investor Alexander Mamut.
Other potential bidders reportedly hovering around HMV Group include retail restructuring specialist Hilco, which has owned Allied Carpets, Habitat and MK One.
HMV has faced increasing competition from online retailers and supermarkets in its core CD and DVD markets in recent years.
The group has been broadening its product mix as part of a fightback, branching into new areas such as technology and entertainment-related product sales.
