A week after HMV fell into administration, a rescue deal by a consortium led by Hilco supported by Universal Music, Warner Music, Sony Pictures and 20th Century Fox, among others, has been initiated to save HMV from closing down. Universal Music, Warner Music, Sony Pictures and 20th Century Fox have agreed to slash the prices of their CDs and DVDs as well as offer HMV more favourable credit terms to avoid HMV closure.
Hilco UK is a firm that specialises in buying retailers out of administration and turning them around. Hilco had bought HMV’s Canadian operation from the UK entertainment group in 2011. Hilco appears to be the front runner to buy HMV, and talks with Deloitte, HMV’s administrator, are set to continue this week.
Also in the race to save HMV from closing down are private equity firms Endless and Better Capital and the restructuring company Gordon Brothers, while the video games chain Game, owned by the distressed investor OpCapita, is eyeing up as many as 45 of HMV’s stores.
Last week HMV, which has 223 stores, fell into administration, making it one of the biggest retail casualties of the economic downturn. Deloitte was appointed as HMV’s administrator and the firm is still “hopeful” of rescuing the 92-year-old entertainment retailer. Deloitte is believed to have received “well over 50″ interests from potential bidders, igniting a hope of retaining between 50 and 100 of HMV stores.
The HMV rescue deal is expected to be complex and difficult as the music retailer collapsed with debts of £176.1m, and that it has a number of loss-making stores. Although Deloitte continues to trade HMV stores, some store closures and job losses among its 4,100 staff are inevitable. Despite the recent troubles, HMV is still responsible for one fifth of the British music and DVD market.