Deloitte administrators given hope on HMV future
Investors buy HMV debt, giving fresh hope to a rescue deal
DELOITTE ADMINISTRATORS have been given fresh hope for the future of collapsed music retailer HMV after a restructuring investor bought its secured debt.
Nick Edwards, Rob Harding and Neville Kahn, Deloitte partners, have been appointed joint administrators to HMV Group plc, HMV Music Ltd, HMV Ltd and Fopp Entertainments Ltd.
The administrators confirmed that Hilco has acquired HMV’s secured debt from its lenders – reported to be Lloyds and The Royal Bank of Scotland.
Edwards said: “Following the news earlier today of Hilco’s acquisition of HMV’s secured debt, the administrators will work closely with them, as secured lender, as we continue to seek a positive outcome for the business.
“Stores continue to trade and at this time we remain hopeful of securing a long-term future for HMV as a going concern.”
The Times reports that HMV had a net debt of about £140m, with Hilco paying about £15m to control that debt as the investors are expected to pay a further £19m to the lenders at a later date. This means the secured lenders are to receive just 25p for every pound owed.
As one of the main creditors to HMV, Hilco will now need to work closely with the administrators on the future of the business, with options including a sale or breakup. It is also reported that some of the biggest suppliers such as Universal, Warner and Sony have backed the Hilco acquisition.
Hilco owns HMV Canada and has worked with Habitat to turn its operations around in the past.
Earlier this week, the administrators announced that it would now redeem gift cards. Usually, in administration owners of gift cards are given unsecured creditor status and are generally repaid 1p for every £1 owed.
HMV is headquartered in London and operates out of 223 stores with about 4,123 employees. It has estimated debts of nearly £300m.
Hilco declined to comment.