Grim news about HMV this evening, as Robert Peston reveals insurers are starting to refuse to cover sales from suppliers to the chain:
Here is an extract from an e-mail sent by the "head of credit and collections" at the UK arm of a major UK manufacturer and distributor of CDs and DVDs:Simon Fox told Peston he was "unaware" of this situation; it means that entertainment companies which supply HMV are doing so at their own risk.
"I need to advise you that our credit insurers have significantly reduced our insured credit limit on all HMV entities. Based on the current HMV balances, the limit is not sufficient to support any sales on an insured basis moving forward.
"I have this morning met with the Chief Executive and Risk Director at the insurance company to understand the reasons for such a quick and drastic reduction. Due to HMV's listing on the stock exchange, they are unable to divulge the reasons for their decision. They met with Simon Fox last week and whilst they have said that HMV has provided everything asked for, they are clearly worried following the public announcement that bank covenants may not be met. A further review will take place in 4 weeks time."
Robert Peston reckons the entertainment companies will prop up HMV for the time being, but given that record companies aren't entirely well-placed for funds, it's not clear how long they can keep that going.