HMV given a stay of execution in bid for survival
Embattled retailer HMV Group says it has secured more time in its battle for survival, despite issuing a third profits warning this year.
The company, which owns 731 HMV, Waterstone's and Fopp stores, said its banks have made an agreement to put back financial tests from the end of April until the beginning of July.
The agreement was negotiated after HMV presented its plans to secure the future of the business, which are understood to include the potential sale of the book chain Waterstone's.
However, the company said negotiations were still ongoing in that respect.
The extension came as HMV warned, for the third time this year, it would miss profit expectations as trading continued to suffer last month.
The company said pre-tax profits would now be around £30m - down from a previous estimate of £38m at the beginning of last month.
HMV Group, which has been forced into closing 60 stores over the next 12 months and with it the shedding of jobs, aims to cut costs by another £10m a year.
It saw sales plunge 13.6% in the UK and Ireland over Christmas and has since been hit by supplier troubles as firms struggle to gain credit insurance due to fears over HMV's trading.
The group said trading conditions have remained difficult since its last trading update at the beginning of March.
But its banking facilities "remain fully available" and lenders continue to be supportive, the group said.
The company is likely to see the time extension as a vote of confidence in the proposals it has presented to the banks.
HMV recently confirmed it was "exploring strategic options" for both Waterstone's and the music firm's retail arm in Canada but said that no discussions were taking place about an offer for the group as a whole.
It is understood that HMV needs to raise £75m in return for a relaxation of its lending covenants.