HMV thrown lending lifeline

Beleaguered entertainment retailer HMV has agreed a refinancing deal with its lenders to secure its short-term future.

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HMV has agreed a £220m banking facility for the next two years with its lenders, Royal Bank of Scotland and Lloyds Banking Group.

The deal will issue the banks with warrants worth 5% of the company that will be converted into shares next year.

HMV will need to pay up to 14% of its loans by 2013.

It is estimated HMV has debts of £170m and the company has issued several profit warnings over the last 12 months as it struggled to compete with lower-priced internet retailers.

Commenting on the new refinancing deal, HMV chief executive Simon Fox says: “We are very pleased to have concluded the new bank facility, which represents another important milestone in securing the financial stability of the Group.”

Last month HMV sold its Waterstone’s book store chain to Russian investor Alexander Mamut for £53m, as the Group reported dire trading for the quarter.

Total sales across the group, including Waterstone’s, fell 16.6% in the three months to 30 April.

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