Ailing high street music retailer HMV has entered into administration less than one month after it published interim financial results citing the possibility of it breaching banking covenants.
HMV: Outlets may stay open as potential buyer is soughtThe chain, which first opened in 1921, has more than 200 stores and more than 4,000 members of staff.
Appointed administrator Deloitte will try to keep outlets open as it assesses the likelihood of selling the company to a potential buyer.
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In its interim results for the 26 weeks to October 27th, the group revealed a loss after tax of £36.1m. Only four months ago, it recruited a new Chief Executive Officer and Chief Financial Officer.
On December 13th, the company announced that as a result of current market trading conditions, it faced material uncertainties and it was probable that the group would not comply with its banking covenants at the end of January 2013. The company also stated at this point that it was in discussions with its banks.
HMV: unable to trade outside of insolvency protectionA statement issued by the company on Tuesday morning read: "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."
The company's ordinary shares will be suspended from trading on the London Stock Exchange with immediate effect.
MF
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