Majors’ Lifeline For HMV

Major music companies such as Universal, Warner, EMI and Sony are reportedly talking to HMV about supplying it with CDs without the retail giant having to make up-front payments.

If the majors are prepared to provide a selection of non-chart music on a sale-or -return basis, it could reduce HMV’s capital requirement by as much as £15 million.

As much as 60 percent of HMV’s stock is back catalogue. The company’s cash flow would benefit from not having to pay in advance.

That in turn would help its negotiations with its bankers, who have already given the company a two-month extension on its deadline to meet its loan covenants.

HMV now has until July 2 to find ways to reduce its £130 million debt. Reducing its need for £60 million of working capital would help ease the situation.

The Daily Telegraph says HMV is still talking to Russian billionaire Alexander Mamut about the sale of Waterstone’s book shops, which most analysts value at about £60 million.

Mamut has recently increased his holding in HMV, which has prompted stories suggesting he’s considering buying the entire company.
The possibility of getting help from the majors hasn’t helped HMV’s position on the London Stock Exchange, where the share price is sliding toward 11 pence.

It was more than 26 pence at the beginning of the year and on April 12 Arden Partners, brokers that provide a range of financial services to corporate and institutional clients, issued a note saying it expects it will drop further to 10 pence.