HMV Squeezed On Waterstone’s
HMV’s hopes of raising $116 million by selling its Waterstone’s book store chain look to have taken a knock as Russian oligarch Alexander Mamut is reportedly on the verge of offering about half that amount.
The Sunday Times say the low price-tag deal, which is expected to be completed by the end of the month, shows HMV’s almost desperate need to raise capital.
The company was given a two-month stay of execution on meeting loan covenants on debts of about £130 million ($214 million), but the last of this year’s three profit warnings cut the forecast from £45 million to £30 million.
The share price is in free fall. That third profit warning, which came April 5, saw HMV’s stock fall 20 percent to 12.25 pence. A day later it fell a further 4.1 percent to 11.75 pence and it’s subsequently slipped to 10.5 pence.
Lenders including Royal Bank of Scotland and Lloyds Banking Group are said to have demanded HMV either sell assets to raise capital or issue more stock.
The Sunday Times report also said the music retailer-turned 360-degree music business is considering a corporate voluntary arrangement, a method of rescuing companies that are insolvent but still have an underlying business that could be profitable in the future.
Mamut, a friend of Waterstone’s founder Tim Waterstone, looks poised to take advantage of HMV’s need for quick cash.