HMV has been handed a lifeline. Retail restructuring specialist Hilco has swooped in with a rescue package for the British chain — reportedly worth some £50 million ($76 million). The arrangement all-but secures the future for the once-great music and entertainment retailer, and saves some 2,500 jobs.
The deal was announced this morning, when Hilco reported that it had “completed the acquisition of the business and certain assets” of HMV from its administrators, Deloitte.
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The business, according to Hilco, includes 141 stores, 25 of which the administrators had earmarked for closure. Hilco, which already owns HMV Canada, will also take-on the nine low-price Fopp outlets through today’s purchase. All told, the acquisition should protect the jobs of some 2,500 employees, Hilco said.
Paul McGowan, CEO of Hilco, commented: “We hope to replicate some of the success we have had in the Canadian market with the HMV Canada business which we acquired almost two years ago and which is now trading strongly. The structural differences in the markets and the higher level of competition in the UK will prove additional challenges for the U.K. business but we believe it has a successful future ahead of it.”
HMV U.K. will be run by a combination of incumbent HMV and newly-appointed Hilco executives. The company be led by Ian Topping, the former CEO of South African retail group Steinhoff, while McGowan becomes HMV chairman.
The bulk of HMV’s content supply chain — including the major music companies and film studios — are understood to have agreed to new terms and have “given their blessing” to the deal, according to an earlier Sky News report, which leaked today’s news. The retailer’s landlords are also said to be supportive.
After a long, painful decline, HMV in January suspended the trading of its shares and entered administration, the U.K. equivalent of Chapter 11 bank protection.
HMV’s economics had been smashed by a devastating combination of falling volumes and tumbling realized prices — while rental costs remain unchanged and employment and energy costs continue to rise.
The troubled music and entertainment company had been the U.K.’s last major high street music retailer and, at January, had more than 230 brick-and-mortar HMV stores in the United Kingdom and Ireland along with the nine Fopp outlets.
Administrators Deloitte were called-in and in February the first wave of HMV store closures were announced — 66 outlets across the United Kingdom were shuttered, at the cost of nearly 1,000 jobs.