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Hilco £50m deal set to save 2,500 jobs at HMV

 

Sam Masters
Friday 05 April 2013 01:40 BST
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The ailing high-street music retailer HMV was last night said to be on the verge of a £50m rescue in a move that could save 2,500 jobs.

Hilco, the specialist restructuring firm that professes to restore the fortunes of companies in "distressed business situations", is reportedly poised to sign an agreement to secure HMV's future today.

Job losses among HMV's 4,100 staff were previously thought to be "inevitable" under a complex rescue deal after the company collapsed with debts of £176.1m and a slew of loss- making stores last year. Now Hilco is said to be prepared to save at least 2,500 jobs and keep open 140 HMV stores in Britain.

Following weeks of speculation that the chain could disappear from high streets up and down Britain, a deal was last night said to involve HMV emerging from administration backed by a new company incorporated in the UK.

According to reports, Hilco will acquire HMV stores and all nine outlets operated by the reduced-price music brand Fopp. Sky News reported that an agreement was likely to be signed today but claimed it "could yet be delayed".

In January, as Deloitte was brought in to operate HMV's stores, The Independent revealed that Hilco was the frontrunner to bring the company out of administration. The company said there was a "viable underlying" business model at HMV as it purchased the group's debt.

Universal Music, Warner Music, Sony Pictures and 20th Century Fox, among others, are thought to be prepared to trim prices of CDs and DVDs to HMV and offer the 223-store retailer more creditable terms in a bid to continue its 92-year presence on the high street

Hilco, which owns Denby Pottery, has a history with HMV – it acquired HMV's Canadian operations from the UK entertainment group in 2011. Since then it has successfully turned around HMV's Canadian business and also has plans to re-establish the brand in Ireland.

It is due to secure the company ahead of interest from private equity firms Endless and Better Capital and the restructuring company Gordon Brothers. Now the shops are expected to be run by a combination of HMV and Hilco executives.

Yesterday, staff at a number of HMV branches across Britain that were thought to be earmarked for closure told customers they were "here to stay" thanks to "the support of valued customers and landlords".

Branches in Edinburgh, Leamington, Nuneaton and Newport were among those said to be remaining open in the long term. "If it's confirmed HMV will stay open, that is good news," said Graham Birse, from Edinburgh Napier Business School.

Timeline

January 2011: Begins the closure of 40 stores and 20 Waterstones bookshops.

May 2011: Sells Waterstones for £53m in a bid to reduce debt.

June 2011: Sells its Canadian business to Hilco and secures two year refinancing plan worth £220m.

May 2012: Chief executive predicts HMV will return to profits in 2012-13 financial year.

January 2013: HMV suspends its share trading and plunges into administration

April 2013: Hilco poised to rescue the retailer.

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