Up to 300 jobs at risk as HMV set to go into administration

Up to 300 jobs are at risk here as music retailer HMV last night announced it is to go into administration.

The future of the company has been the subject of intense speculation since before Christmas when it issued a “going concern” warning. It also said it was likely to breach banking covenant tests at the end of January.

In a statement issued last night, HMV said following a board meeting that lasted several hours, it was decided the business could no longer trade without insolvency protection.

“The board regrets to announce that it has been unable to reach a position where it feels able to continue to trade outside of insolvency protection, and in the circumstances therefore intends to file notice to appoint administrators to the company and certain of its subsidiaries with immediate effect. The directors of the company understand that it is the intention of the administrators, once appointed, to continue to trade whilst they seek a purchaser for the business,” said the statement.

Deloitte is expected to be appointed as administrator in a last ditch effort to save the retailer, which has 16 stores in Ireland and employs in the region of 300 people. It employs approximately 4,000 people across Britain.

Last month, chief executive Trevor Moore, who joined the group from camera chain Jessops, said HMV was in talks with banks over its future after worse-than-expected trading in the run-up to Christmas.

As a result, he said the terms of its bank loans were not likely to be met this month and in April — which raised speculation about the future of the company.

HMV said like-for-like sales fell 10.2% in the 26 weeks to Oct 27 as its pre-tax loss narrowed to £36.1m, (€44.6m) compared with £50.1m the previous year.

The dismal results came despite reports that HMV has received £40m in financial support from its suppliers in a bid to keep it going over the vital festive period.

The company’s shares tumbled 39% after the results were published, giving the retailer a market value of just £10.1m.

Suppliers including Universal Music came to HMV’s rescue last January with a deal that helped the chain shed some of its huge debt pile.