Financial News

  • 21 January 2013, 14:24

HMV Tunes Into Rescue Deal With Hilco

A specialist restructuring firm is in talks to strike an unusual deal with the administrator to HMV that would salvage the short-term future of the stricken entertainment retailer.

I have learnt that Hilco UK is in detailed negotiations with Deloitte, the accountancy firm that was appointed to find a buyer for HMV last week, about an agreement that would see all 229 shops in the UK trading as normal. A deal could be announced as soon as today, according to people close to the talks, although its complexity means that it could be delayed until later in the week.

Under the proposed deal, HMV's ownership would not change hands and it would remain in administration. Hilco would be appointed to work alongside Deloitte to assist it in running the business.

The deal with Hilco remains subject to significant changes and it could yet fall apart, people close to the process cautioned.

Deloitte announced on Monday that HMV would resume selling gift-cards to customers. Controversy had surrounded the company's decision to ban redemptions of vouchers when Deloitte was appointed last Monday night despite the fact that they had been on sale until hours before the chain's collapse.

In a statement, Deloitte said: "The Joint Administrators to HMV today confirm that gift cards can be redeemed in stores from Tuesday 22 January. Additionally, the Joint Administrators confirm that proceeds raised by HMV through the sale of charity releases (including the Hillsborough Justice Collective single) will be paid in full as soon as possible."

Nick Edwards, joint administrator, commented: "The ability of Administrators to honour gift vouchers will depend on the specific circumstances of each case. Since our appointment as Joint Administrators on Tuesday afternoon, we have been urgently assessing the Companies' financial position.

"I am pleased to confirm that, having concluded this assessment, we are able to honour gift cards. I can also confirm that all money raised by HMV for various charities will be paid in full. We recognise that both of these matters have caused concern for individuals and organisations affected and are pleased to have reached a positive outcome.

"We will continue to assess the longer term options for the business whilst continuing to trade. I am hopeful this process will result in the business continuing as a going concern."

The completion of a deal with Hilco is dependent upon terms being agreed with the key suppliers to HMV, which include the major record labels and film distributors.

Hilco stands to earn millions of pounds from its work managing HMV although it is unclear whether the financial terms will be published.

A spokesman for Hilco, which already owns HMV's Canadian business, declined to comment.

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