Bloomberg News

HMV Rescue Bid Weighed by U.K. Private-Equity Firm Endless

January 15, 2013

Endless LLP, a private-equity firm that focuses on companies in distress, contacted HMV Group Plc (HMV)’s prospective administrators with a view to buying the U.K.’s biggest retailer of CDs and DVDs.

Garry Wilson, a founding partner at Leeds, England-based Endless, said in an e-mailed statement that he has been in touch with Deloitte LLP about the high street chain.

HMV is among specialist U.K. retailers hurt by growing competition from supermarkets and Web retailers such as Amazon.com Inc. The store known for its iconic “His Master’s Voice” dog-and-gramophone trademark faced a test on its bank loans at the end of January, and said yesterday it was unable to trade without insolvency protection.

Once appointed as administrators, Deloitte plans to keep Maidenhead, England-based HMV’s 230 stores open while seeking a buyer for the business.

There’ll be a “flurry of interest” in HMV and any rescue deal will depend on support from the retailer’s suppliers, Endless’s Wilson said. “If they don’t give the new owners any credit, then the cash need to resurrect it will be huge and put off most people,” he said.

Endless’s latest investments include U.K. retailer Bathstore and visual effects studio Cinesite, according to its website.

James Igoe, a spokesman in London for Deloitte, didn’t return to two phone calls and an e-mail.

Bank ‘Support’

Lenders led by Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc provided “significant support” to HMV in the last two years, according to an e-mailed statement from RBS. “Despite the best efforts of management, lenders and suppliers, it has not proven possible to avoid a formal insolvency process,” RBS said.

HMV said in December it was “probable” it wouldn’t comply with banking covenants this month. The retailer said in the statement that its net debt was 176.1 million pounds ($283 million) as of October.

HMV’s syndicate of banks agreed last year to extend the maturity of its 220 million pounds of loans to September 2014 from 2013, according to data compiled by Bloomberg.

The company had been working with suppliers and banks for the last few weeks as it sought a rescue deal, Ian Kenyon, HMV’s finance director, said in a conference call today.

To contact the reporters on this story: Patricia Kuo in London at Pkuo2@bloomberg.net; Tom Freke in London at Tfreke@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net


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