Friday, 25 March 2011

BOOK NEWS: HMV considers selling Waterstone's


waterstone's islington green
HMV's board is 'exploring strategic options in respect of Waterstone's', according to the company. Photograph: Graeme Robertson for the Guardian
HMV confirmed this morning that it is looking at selling off theWaterstone's chain of booksellers, but insisted that it is not in talks about a takeover for the whole group.
Shares in the troubled retailer jumped 7.5% to 18p, a rise of 1.25p, after it updated the City on its plans, which could also include finding a buyer for its Canadian operation.
Speculation has swirled that its shareholder, the Russian oligarch Alexander Mamut, could break up the business ever since HMV posted a shock profit warning following poor trading over Christmas.
Mamut has now assembled a 6.1% stake in HMV. There has been speculation that Tim Waterstone, the entrepreneur turned novelist who founded the bookshop in 1982, is plotting a bid for Waterstone's with Mamut. He previously teamed up with Mamut to invest in Bookberry, a now bankrupt Russian bookstore chain.
"In response to press speculation, the board confirms it is exploring strategic options in respect of Waterstone's and HMV Canada," HMV said. "The board also confirms that no discussions are taking place with respect to an offer for the group."
Amid worries that it could breach loan covenant tests, the company stressed that its lenders "continue to be supportive, our banking facilities remain fully available and the group is continuing to maintain a regular and constructive dialogue with its lenders".
HMV issued its second profit warning of the year at the beginning of the month, saying trading conditions had remained difficult since the start of the year. It also admitted that it expected to fail some parts of a critical loan covenant test next month and was busy renegotiating borrowing conditions with its bankers.
The company is already planning to close up to 20 Waterstone's outlets and about 40 HMV stores as part of a cost-cutting drive
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