Music and game retailer has been in the news a lot in the last few months as it struggles through these tough economic times. There have been some who feared the company could go under at any time as it looks at ways to improve its fortunes. Today we have some good news about the retailer as HMV turns the corner with a new deal.
It has been announced that the retailer has reached an agreement with its suppliers and its banks, as the future looks a lot rosier for the retailer. According to a report on The Guardian HMV is planning on giving 2.5 percent of its equity to its major suppliers, which will be in the form of warrants. Other parts of the deal are to remain secret, and the company believes its financial situation will be a lot healthier over the next three years.
HMV is the last music and DVD retailer left in the country that has a nationwide presence, and for it to collapse would also be damaging to the movie companies and record labels. Previously shares in the retailer had dropped 90 percent last year, but doubled in value following the news. It is now thought all the risk will now be with the suppliers.
The new deal is thought to include the likes of EMI, Sony Music, Universal Music and Pictures, Warner Brothers, and Disney. Games and consoles suppliers are not thought to be part of the deal, and it has been mentioned previously that the retailer may scale down its offerings of the sector.
There may be now a bigger focus on its movie and music offerings and stores are expected to increase their vinyl offers. The company is also likely to continue to offer the likes of iPads and headphones in its technology push.
HMV have also managed to get its banking covenants relaxed, which comes a few months after they were last relaxed. Chief executive Simon Fox believes the group’s debts will reach £180 million by April, but going on current trading feels this can be halved within three years. They could also raise around £60 million with the sale of its Live business.
Do you hope HMV will survive?