HMV has entered exclusive talks with Tim Waterstone and HMV shareholder Alexander Mamut about a possible sale of Waterstone’s, it is understood.

Russian oligarch Mamut, who has built up his shareholding in HMV to 6%, is prepared to inject his own money into the bookseller, according to the Mail on Sunday.

HMV said on Friday it was mulling the sale of Waterstone’s, as well as its Canadian business, after months of speculation.

The entertainment retailer is in danger of breaching its banking covenants and is in discussions with its lenders about a new turnaround plan. HMV suffered from a poor Christmas and has issued two profit warnings this year.

Waterstone, the founder of the book chain that bears his name, has teamed up with Mamut before, operating a book chain in Russia.

The books chain is expected to fetch around £75m.