By Ben Sillitoe - 11:08AM - Wed 29th June 2011
Entertainment retailer HMV Group has today completed the £53 million sale of its bookselling arm Waterstone’s to A&NN Capital Fund Management Limited, a company fronted by Russian billionaire and HMV shareholder Alexander Mamut.
The deal, which was approved by the vast majority of shareholders at an emergency general meeting last Thursday, raises funds that will help pay off some of the group’s £170 million debt and allow it to focus on its core markets in the UK & Ireland.
HMV Group secured a refinancing package from its lenders earlier this month and it is believed that the decision to offload Waterstone’s played a significant part in the banks’ decision to provide the embattled company with the two-year financial lifeline it required to keep the company afloat.
Today’s announcement comes after HMV Group earlier this week completed the £2 million sale of its once highly profitable Canadian arm to restructuring specialist Hilco UK, as part of continuing cost-cutting measures.
This flurry of activity comes ahead of tomorrow’s year-end results, which are expected to show a significant annual sales decline. It is also likely to be accompanied by a statement indicating the business’s plans for growth through the introduction of new stores that sell technology products.
It was announced in May that HMV’s like-for-like group sales, excluding its live music segment, fell 11 per cent in the year to April 30th 2011, but the business indicated that its recent decision to focus on selling technology was already starting to pay off.
Nick Bubb, Retail Analyst at Arden Partners, said: “The focus now shifts to the success of the technology store roll-out and HMV will say a lot more about this shortly.
“We remain cautious on how the technology push will go this Christmas, expect the group to break-even at best this year and still expect an equity raise after Christmas, whatever happens.
“The shares are still best avoided.”