HMV rescue package looks likely as Hilco buys debts of music chain

January 22 2013 03:48 PM

HILCO has bought the debt of HMV, according to sources close to the situation.

This move by the restructuring specialist gives it a big influence in the fate of the entertainment retailer which went into administration last week.

Hilco, which bought HMV Canada in 2011 and salvaged home goods firm Habitat, has bought the debt from HMV's lenders Royal Bank of Scotland and Lloyds, sources said today.

HMV, which has over 200 stores and more than 4,000 staff, had underlying net debt of £176.1 million (€210m) in October.

The acquisition does not mean Hilco now owns HMV but does give the group a central role in its future, potentially giving the 92-year-old retailer and its administrators Deloitte more time to attract new backers.

Hilco, RBS and Lloyds all declined to comment. Deloitte was not immediately available for comment.

Deloitte has received over 50 expressions of interest in HMV including from trade buyers and private equity firms. Video games seller Game has confirmed it is interest in buying a number of HMV stores.

Hilco has widely been regarded as a frontrunner to take full control of HMV due to its relationship with music labels and film studios through its Canadian business.

On Monday it was appointed to help Deloitte run the business during the administration process, one of the sources said.

HMV's business of selling DVDs and CDs has struggled in declining markets and amid increased competition from supermarkets and online retailers such as Amazon.