Private equity-backed music retailer Virgin Megastore France (VMF) is reportedly planning to declare itself insolvent next week, as CD and DVD sales continue to slump amid competition from online competitors.
The company plans to file to suspend payments during a meeting of staff representatives on Monday – the first step towards a court-ordered company restructuring in France, Reuters reported on Friday.
VMF is said to be struggling under a €22m debt pile that has grown over the last four years, amid an industry-wide slowdown in physical sales due to the rise in popularity of downloading music, films and TV programmes via the internet.
The company posted turnover of €304m in 2010.
French buyout firm Butler Capital bought Virgin France in 2008 from French media group Lagardere, which bought the business from Virgin founder Richard Branson in 2001.
Butler began raising its fourth buyout fund in 2010 with a target of €500m, and has made four investments since, comprising jeweller and watchmaker Groupe Christian Bernard, technology repair company Anovo, casino and online gaming business Groupe Partouche and business intelligence company ADIT.
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