Fri, 05 Apr 2013 | BUSINESS SALE
Restructuring experts Hilco are set to throw HMV a lifeline in the form of a £50 million deal that could save 2,500 jobs.
Reports from Sky News revealed that the deal will see HMV emerge from administration. Hilco, which already owns HMV's debts, will acquire about 130 of HMV's branded stores and all nine of the remaining Fopp stores.
Before entering administration the company had a total of 230 stores in operation in the UK, but a number of the less profitable outlets have been closed and prepared for sale already.
The deal would be a binding agreement that would see HMV emerge from administration with the backing of a new company incorporated in the UK. The deal could well be announced later today but delays are also still possible.
It is not a surprise that Hilco has been the one to step up to make the rescue deal. The business bought HMV's debts just days after Deloitte was appointed to handle its administration back at the end of January. Hilco, which already owns HMV's business in Canada, also helped to manage the business alongside Deloitte.
Hilco was not the only party interested in HMV, however. Supermarket chain Asda also considered making an offer, as did private equity veteran Jon Moulton.
The deal is thought to have been welcomed by big entertainment companies, including music and film studios. These businesses are keen to keep a major distribution route open on the UK high street; with the closure of Virgin and later Zavvi, HMV has become one of the last nationwide outlets.
HMV itself struggled under a mountain of debt much larger than the group's stock market value. As online competitors grew in popularity, the company struggled to provide a unique service that could tempt shoppers away from cheaper online prices. It remains to be seen which direction Hilco will take the firm in to turn this around.
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