Sat, 15 Dec 2012 | ADMINISTRATION
Rumours of a potential administration have started up once again around struggling entertainment store HMV.
The summer saw a further collapse in demand for CDs, DVDs and games, leaving the business with a first-half loss of £36.1 million. Like-for-like sales slumped ten per cent in the six months to 27 October and suppliers held back new titles, fearing they would be overlooked for the Olympics.
Trevor Moore, the firm's chief executive, said that there was "material uncertainties facing the business" due to these tough trading conditions. However, he did insist that an administration or the closure of stores was not "part of the plan at the moment", although steps are being taken to cut running costs.
In an attempt to reassure investors, he added: "I joined the group because I believe it has a strong future. If I thought we had tried everything I would not have joined."
However, the retailer has a debt burden of £176 million, despite having sold off the Waterstones chain and its live music venues around the country in an effort to raise funds. The company admitted that it was "probable" that its banking convenants would be broken when they were tested in January.
Such a breach would put the banks in control of the company's future and, while it would be preferable to keep the company in operation, there is a strong risk that more assets could be sold off or an administration could even be on the cards in the future.
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