HMV calls in KPMG for debt advice
KPMG’s appointment comes just after it emerged that at least one credit insurer had tightened terms of cover for businesses that supply CDs, DVDs and computer games to HMV, following a profit warning this month that the retailer might breach banking covenants.
HMV boss Simon Fox has called in debt advisers from KMPG to help implement a dramatic cost cutting programme ahead of a loan covenant test due to be carried out by the group’s banks in April.
The group has already admitted that meeting the test would be “tight”, and has already said it plans to close or sell 60 stores over the next 12 months and make a further £10m of savings from across the group.
The news sent shares in HMV down and prompted HMV to claim that it still has excellent relations with its suppliers.
“Credit insurers are reviewing the level of cover they provide on the group,” HMV said.
“Whilst this has resulted in the reduction in the availability of credit insurance to certain of the company’s suppliers, our business remains a core channel to market for them.”
Suppliers to high street legend Woolworths and HMV’s former rival Zavvi had their credit insurance withdrawn in 2008, shortly before their demise.
