HMV calls in specialists to tackle its £152m debt pile

HMV last night revealed it has brought in a team of specialist advisers to help it with its £151.6m debt pile ahead of a key financial health test in April.

The debt advisory team of accountants KPMG has been drafted in to help prevent the embattled music retailer from breaching key lending agreements with its banks.

The development came as HMV shares fell to an all-time low yesterday amid concerns about its ability to buy stock.

HMV tumbled as much as 10pc at one point after some of its music and entertainment suppliers warned insurance covering CDs and DVDs provided on credit might be reduced.

Shares in the firm, which also owns book retailer Waterstone's, later recovered to close down 3pc. 


Chief executive Simon Fox had warned in January that HMV (down 0.75p to 25.25p) may breach its loan covenants  -  the conditions under which banks agree to keep lending it money.

Net debt almost doubled from £88.1m early last year after HMV bought Mama Group, which owns venues like London's Hammersmi t h Apollo.

KPMG may help HMV renegotiate some of the terms of its borrowing facilities with its lenders after Fox already admitted April's covenant test 'will be tight'.

He said last night: 'We have received specialist debt advice for every year since the group was formed in 1998 and, given our recent statement on debt covenants, the company will continue to take this type of advice as prudently appropriate.'

Suppliers rallied round HMV yesterday, pledging to continue supplying it despite having previously refused to provide stock to other retailers without insurance.

Credit insurance provides financial safety cover for suppliers as they wait for the six to eight weeks it takes their retail customers to pay them.

Without it some are exposed should a retailer collapse.

Both Sony Music and the wholesale arm of Chrysalis Records said they would continue to support HMV.

Peter Lassman, chief executive of Lasgo Chrysalis, said: 'I can tell you it is business as usual, they enjoy our full support and we are not concerned about them going out of business. Companies go through problems some of the time and that does not mean they are bad companies.'

Problems with credit insurance was one of the key factors in the collapse of Woolworths and Land of Leather.

But JJB Sports, which had a similar issue in 2008, managed to pull through.

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