HMV Obtains Lifeline

HMV's future is looking more secure now the embattled entertainment retailer has cut a deal with its banks and suppliers.
The music and film retailer has struck a deal with its banks to waive contracts on £180m of debt – a move that came after HMV announced key suppliers in the film and music industry were to take a small equity position in the group.
The new deal with suppliers gives them 2.5% of the shares in HMV and should cut debt by 50% within three years.
Warrants representing 2.5% of the group’s equity have been granted to key film and music suppliers, including Vivendi-owned Universal Music, Sony, Warner Brothers, Disney and Paramount.
HMV said the new deal would have a "materially positive impact" on the group's profitability and cash flow.
Meanwhile the deal is a sign that the music and film industry is willing to support high street retailers at a time when online shops provide intense competition and internet piracy damages trade.
Now that HMV is one of the only specialist retailers on the high street selling CDs and DVDs after the collapse of Zavvi and Woolworths, its suppliers, have acted to preserve their biggest route to market.
(LB)