Apollo Said to Rule Out HMV Bid After Buying Passive Debt Stake

Apollo Global Management LLC will remain a passive investor in HMV Group Plc after acquiring a stake in the U.K. retailer’s bank debt, according to two people familiar with the matter.

The asset-management firm has no plans to make an offer for the seller of CDs and DVDs, according to the people, who declined to be identified because the matter is private. The Sunday Times reported on Jan. 6 that New York-based Apollo was considering a takeover of HMV, which last month said it will probably breach debt covenants in 2013 amid continued losses.

Apollo acquired the stake of about 6 percent in HMV’s bank debt about two weeks ago, the people said. Neither HMV nor Apollo would comment on the price paid.

The holding is too small to influence any planned restructuring of the business, they said. Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc are the lead banks and will lead any restructuring discussions, the people said.

A spokesman for HMV declined to comment. HMV shares have fallen 41 percent this year, adding to last year’s 44 percent slump and reducing the company’s market value to 4.9 million pounds ($7.9 million). The retailer last month reported a first-half net loss of 36.2 million pounds and on Jan. 12 started selling CDs, DVDs, box sets and games at a 25 percent discount. Its net debt was 176.1 million pounds as of Oct. 27.

Apollo is the smallest stakeholder in the bank debt and has no plans to make additional purchases, the people said.

The asset-management firm in December agreed to buy U.K. luxury jewelry retailer Aurum Holdings, which includes Watches of Switzerland, Mappin & Webb and the Goldsmiths brands.

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