Cloud over HMV deal
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.IN WHAT is a source of increasing embarrassment to the boards of music group EMI and investment bank SBC Warburg Dillon Read, the pounds 800m deal to create HMV Media has hit further serious problems.
HMV Media, which includes the Dillons to Waterstone's chain of bookshops and HMV record stores, has been a remarkable comeback for Tim Waterstone. But City support for the deal has been lukewarm. Bankers are seeking to raise pounds 600m in debt to pay for the sale of Dillons and Waterstone book chains and the HMV record stores. Another pounds 200m has already been raised in equity. But demand for a combination of bank borrowing and high-yield bonds has been limited.
This week it is understood that SBC Warburg will mount an emergency rescue operation, which could include rewriting the terms of the loans in a bid to boost the appetite of banks and reduce the perception that the deal is too risky. Observers say that SBC Warburg has still to sign up a single bank for the loans. One banker said: "If I was in their shoes, I'd be doing everything possible to get the deal done."
If the banks balk at participating, SBC Warburg and Merrill Lynch, the other arranger, must provide the funds themselves. Last week, SBC Warburg was under the spotlight when it was left holding a 4.4 per cent or pounds 197m stake in Orange, the mobile phone company, after the bank bought British Aerospace's 16 per cent stake in the company. Although one of Britain's leading investment banks, SBC Warburg has been involved in several other problematic fund-raising exercises, including Eurotunnel.
EMI is also just emerging from a period of turbulence over concerns about a severance package for Jim Fifield, the head of its music division. Mr Fifield's golden goodbye could reach pounds 12m, which would make it the largest payout in British corporate history.
HMV Media has an immensely complicated funding package to create Britain's largest independent book and music seller. There are concerns that unless the banks' confidence improves the deal will become irretrievably tarnished. Last week, SBC Warburg had to postpone a pounds 200m high-yield bond from HMV Media for up to six weeks.
Simon Duffy, EMI's finance director, played down the problems. He said that selling the bank loans had "been a bit slow. But we're totally relaxed about it". He added that two American banks had telephoned him on Friday, saying they had heard the deal was in trouble and would be willing to take on the financing. But he had rebuffed their approaches. "It's a done deal - to be blunt, even if the two banks fail to raise any money, we still get our money from them."
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments