HMV Hanging In The Balance
The fate of failed entertainment retailer HMV is hanging in the balance as Hilco is the only remaining bidder and there’s no guarantee a deal will be made.
The retail restructuring specialist has been in pole position to rescue the UK high street chain since buying its debt at a hefty discount, but the second-quarter rent on the remaining stores fell due March 25.
Hilco was expected to get 130 of HMV’s 220-store chain for about £50 million.
The Daily Telegraph reckons one sticking point may be the complexity of discussions between Hilco and other stakeholders in HMV, such as the suppliers and the shops’ various landlords.
It speculated that Hilco may want to secure the future goodwill of the world’s major record companies and film studios, which propped up HMV through Christmas, by persuading them to buy a share of the new company.
The talks are being led by a collection of 15 to 20 film studios and record labels, doubtless including Universal, with all of them worried that without HMV they’d have no major retail presence.
Hilco is understood to be looking to buy about 120 HMV shops, the only deal on the table since supermarket group Asda ditched its plans to go into the entertainment retail business.
When HMV collapsed into administration, the company had 223 UK sites and employed 4,123 staff.
It had debts of close to £350 million, two-thirds of it owed to unsecured creditors who’ve next to no hope of getting their money.
The accounts for the six months up to Oct. 27 show that HMV sustained a loss before tax of £37.3 million on sales of £286.6 million. In the full year to April 2012, the business lost £38.6 million on vastly improved sales of £873.1 million.
Music fans apparently rallied to support the company once its future was in danger.