Retail restructuring group Hilco UK has reportedly purchased the debt of music store HMV.
This represents a serious lifeline for the suffering chain, which was forced to call in administrators last week, putting 4,500 jobs across its 247 stores at risk. We wrote at the time:
HMV has been struggling with debts for just over two years, but was spared by its suppliers, including Universal Music, EMI, Warner Brothers and Disney, who improved commercial terms in exchange for shares of the company. However, those firms have apparently refused to provide additional financing to the retailer, leaving it with few options to find additional resources.
HMV opened its first store in 1921 on London’s Oxford Street and still owns the world’s biggest record shop there. While it had been shift out of films and music and into accessories such as headphones, it had not done enough to counter the declining sales.
The company’s website is still advertising a 25% off sale. Despite its recent financial difficulties, HMV still sells 27% of all DVDs and Blu-Ray discs and 38% of the physical music market.
Hilco’s purchase of HMV’s debt – £176 million, as of October – represents a potential rescue route for the chain, and the firm will now work alongside administrators Deloitte in running the business (though they have not actually acquired HMV). Speaking to people “familiar with the matter”, The Financial Times claims that Hilco’s involvement has “tak[en] the panic out of the situation”.
It was announced yesterday that HMV would start honouring previously-purchased gift vouchers, a U-turn on Deloitte’s previous refusal to accept them when appointed administrators.