While the UK branch of Blockbuster has recently seen the closure of many of its DVD rental outlets following its bankruptcy, HMV look set to enjoy a revival, as news emerged that ‘retail restructuring firm’ Hilco has agreed on a ‘complex deal’ that will see them take on the entertainment retail company‘s extensive debt.
While it is not thought to be an official buy-out, Hilco, who own the separate Canadian branch of the English company, have agreed to pay back the £176m ($279m, €209m) owed to Lloyds and RBS (Royal Bank of Scotland), and as such are permitted to effectively take control of the company for the time being.
This support is continuing with current ‘detailed negotiations’ with HMV administrator Deloitte (who have been running the company since last week when they announced the administration) over an agreement which would allow all 229 of HMV’s UK locations to resume trade as before, only under joint Hilco-Deloitte operation while the administration remains.
It is unknown whether the stores in Ireland, Hong Kong, and Singapore that are owned by HMV Group will survive the process, though the fate of the UK outlets, which are noted as representing around 25% of all ‘physical media’ (DVD and CD) sales in the territory, looks a little more steady, with the deal confirmed yesterday, amidst rumours that the complexities could have caused the move to fall apart. For the time-being, though, HMV are continuing to trade, and have honoured customer’s gift vouchers following a controversial move to void them all last week in response to the troubles.
Nick Edwards, a joint administrator from Deloitte, announced in a statement on Monday (21 January) that the company’s formerly grim fate is now more positive for the business and customers alike, noting: “Since our appointment as Joint Administrators on Tuesday afternoon (January 15), 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.”
A Hilco statement on their purchase yesterday read: “Hilco UK confirms that it has acquired HMV’s debt from the group’s lenders. It has not bought the business itself. Hilco believes there to be a viable underlying HMV business and will now be working closely with Deloitte who, as administrators, are reviewing the business to determine future options.”
While there is still plenty to do in order for the company to be completely salvaged, could Hilco’s intervention offer a lifeline to people’s opinions of DVD sales, which is still running strongly in the face of online streaming. Renting DVDs might be a fast-diminishing concept but it looks like buying them remains alive and well…