HMV to sell Waterstone's stores

Struggling music, books and games retailer HMV is to sell its Waterstone's bookchain to Russian billionaire Alexander Mamut, using the £53 million proceeds to cut debt.

The company, which has issued three profit warnings this year, said it had conditionally agreed to sell Waterstone's to A&NN Capital Fund Management Limited, a company controlled by a trust in which Mr Mamut has an interest.

HMV said the deal is conditional on the approval of shareholders, the pension trustee and pensions regulator, and the consent of its lending banks including a renegotiation of the group's lending facilities.

HMV bought Waterstone's in 1998. In February, Waterstone's Ireland closed two of its five Irish stores and suffered a loss after tax of €8 million in the year to April 24th, 2010, compared to a profit of €1.2 million the previous year.

HMV also updated on trading, cautioning that weak market trends had continued in the core HMV UK and Ireland business, where sales at stores open for over a year slumped 15.1 per cent in the 17 weeks to April 30th.

Total group sales fell 14.1 per cent over the period.

HMV forecast underlying profit for the year to April 30th of around £28.5 million, and year end debt of about £170 million pounds.

Shares in HMV, which have lost 84 per cent of their value over the last year, closed yesterday at 9.96 pence, valuing the business at £42 million.

Reuters