Vultures Hover Over HMV

Deloitte continues to keep British retailer HMV hanging on, although the hovering vultures seem to sense that it can only be a matter of time.

The administrator charged with sorting out the 92-year-old music chain’s £350 million ($529 million) or so debt has only a handful of companies interested in picking over the pieces.

The original flock of about 50 vultures has whittled itself down to five.

Restructuring specialist Hilco is in pole position, having bought HMV’s debt from Royal Bank of Scotland and Lloyds for about a third of its face value.

It’s also owned HMV Canada for a couple of years, a deal that first signaled that HMV needed to trade assets to stay alive.

Hilco also has the goodwill backing of HMV’s suppliers, notably the major record companies and film studios.
It would ideally like to hold on to about 116 stores, or half of what was a 233-store chain.

Supermarket and convenience store giant Asda is widely reported to be in talks with Deloitte about saving the brand and the business, rather than just buying up the stores and converting them to core business.

The Sunday Times says Asda may also look at setting up “mini HMV shops” in some of its larger supermarket outlets.

High street rival Morrisons had already snapped up six stores, which will be converted and added to its M stores convenience chain.

The UK’s convenience store business is dominated by Tesco and Sainsbury, but many British business analysts believe the other two companies interested in all or part of HMV also come from that sector.

The Guardian says there have been four offers to buy Fopp, a nine-store cut-price music chain that’s a sister brand to HMV.

The heat is now getting turned up on Deloitte and HMV, which lost £38.6 million last year, because the next quarter’s rent on the remaining stores falls due March 26.

The bill would run into tens of millions of pounds.

This week HMV has a buy-one, get-one-free offer on all stock that is already discounted with its Blue Cross promotion.