HMV – Simon Fox’s legacy finally crystallises with HMV falling into administration

A “smiley” Mr Fox

UPDATE –  We posted below last Friday and I hope nobody was caught holding the baby. 

The death knell and jostling over the carcass by the creditors begins in earnets –

HMV Group plc

(“HMV” or the “Company” or, together with its subsidiaries, the “Group”)

Suspension of trading in the ordinary shares and proposed appointment of administrators

On 13 December 2012, the Company announced that as a result of current market trading conditions, the Company faced material uncertainties and that it was probable that the Group would not comply with its banking covenants at the end of January 2013. The Company also stated that it was in discussions with its banks.

Since that date, the Company has continued the discussions with its banks and other key stakeholders to remedy the imminent covenant breach. However, 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.

It is proposed that Nick Edwards, Neville Kahn and Rob Harding, partners of Deloitte LLP, will be appointed as the administrators of the Company and certain of its subsidiaries.

The Company’s ordinary shares will be suspended from trading on the London Stock Exchange with immediate effect.

Simon Fox has a lot to answer for. How on earth he walked into a job at Trinity Mirror on a package of almost £2m after decimating £1bn of shareholder value at HMV is, to me, one of the most shocking examples of all that is wrong with the City and the cosy “old boys network”. These guys are in positions that they should never be – they do not have the commercial acumen to run these organisations and it is the shareholders that eventually suffer. Who can forget his jaunt to the Galapagos whilst HMV was burning? Shocking.

With the look of the stock price today, which is down 28%, it’s clear that someone is pulling out what remaining value they can – the funds are unemotional unlike private investors in taking losses. The volume, order book picture and constant selling smells to me like the end is sadly near for this once venerable high street brand. It seems the “month long sale” by the Group has got some analysts asking questions as to whether the banks have forced a stock clear out”. Best case looks to be a debt for equity swap that will frankly wipe out the last vestige of equity or worst case, administration.

Mr Fox you should take a long hard look at yourself tonight and hang your head in shame.

Editor