HMV gets financial boost from supplier deal
HMV has a struck a deal with Universal and other key music and film suppliers that sees them take a 2.5% stake in the beleaguered entertainment retailer as it looks to secure its long-term financial future.
It is hoped the deal will halve HMV’s £180m debt over three years and allow the company time to complete plans to refocus its retail offering on technology products and specialist music and film ranges.
The deal led to the company’s bankers, including state-backed Royal Bank of Scotland and Lloyds Banking Group, amending loan agreements that will see HMV given more time to repay debt.
The other music and film suppliers have not been named but The Guardian reports that they are likely to include Sony Music and film studio Disney.
The survival of HMV as the last remaining major high street music and film outlet, is pivotal to companies such as Universal to slow declining sales of physical products.
In a statement announcing the deal, David Joseph, chairman and chief executive of Universal Music in the UK, described HMV as “vital” to the UK music industry.
Concerns over HMV’s future have been mounting since chief executive Simon Fox said last year that falling sales and debt casted doubt over its ability to continue as a “going concern” in the future.
Sales dipped 8.2% for the five weeks to 31 December and the group has put its Live music division up for sale to reduce debt.
Fox said the “enormously welcome” deal would make a “material improvement” to its financial position.
He adds: “The new relationship with our suppliers and the support of our banks will now enable HMV to wholeheartedly focus all of its energies – working in close partnership with its suppliers, on serving the changing needs of its customers ever more effectively.
“As a key part of this we remain committed to improving our specialist ranging and merchandising of music and DVD whilst also continuing to grow our sales in portable technology and further developing our online and digital offers.”
