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HMV considering sale of Waterstones and Canadian arm

By | Published on Monday 28 March 2011


HMV Group last week said it was “exploring strategic options” with regards both Waterstones and HMV Canada, which basically means it is looking into selling off the two divisions in order to raise some quick cash to combat those much previously reported debt problems.

HMV bosses were in meetings with their bankers last week amid expectations the entertainment retailer will breach covenant terms on its approximately £130 million of debts next month. Although the retail firm says it is still on good terms with its money lenders, it is thought the banks are looking for some assets to be sold off to reduce overall debt obligations, given the disappointing performance of the HMV chain in the UK of late.

Waterstones has always been the obvious contender should HMV Group need to sell an asset to raise some quick cash, especially given reports that Russian business man Alexander Mamut is keen to buy, possibly in partnership with the bookseller’s original founder Tim Waterstone.

However, that a sale of HMV Canada is also being considered suggests the retail firm needs more than the £75 million the Waterstones sale is expected to raise. The Independent also reported this weekend that HMV management is in talks with both Poundland and JD Sports about them taking over eleven of the entertainment firm’s UK stores between them.

All that said, in a statement on Friday, HMV added that there was currently “no certainty that any transaction would be concluded”, while adding that a sale of the whole HMV Group was not on the agenda, despite some rumours Mamut might bid for the whole shebang and not just the Waterstones book shops.

While HMV top man Simon Fox has in the past resisted pressure to sell off some of his company’s retail assets, if it’s a necessary evil to enable his strategy of diversification, it is probably the right thing to do. Most of the debts now causing problems were run up buying live and management firm MAMA and half of 7digital, but an HMV with live, management, digital and fewer retail assets has better prospects long term than a company whose only business is entertainment retail.