NICK BUBB | ARDEN PARTNERS
This seems to us to be a triumph of hope over experience. We expect the higher interest charge to wipe out any earnings before interest and tax this year and we note from the statement that current trading still remains very poor. HMV is now trading on nearly 4.5 times EBITDA and that is much too high.
KATE CALVERT | SEYMOUR PIERCE
The banks clearly have the company over a barrel, which is not surprising given that current trading remains in-line with the 17 weeks to April 30. We are maintaining our Sell recommendation as we believe that the business is a value trap and the Waterstone’s deal is expected to be dilutive to earnings.
JOHN STEVENSON | PEEL HUNT
We fear this is an interim pause before the next step down. Short of an equity fundraising, we struggle to see HMV generating sufficient cash flows to repay the debt in the required timescale. Nonetheless, this removes a key distraction for the business allowing management to focus on restructuring.