Embattled HMV Group has agreed a revised two-year banking facility of £220 million with its lenders, effectively securing the short-term future of the entertainment retailer.
Its banks, which include the state-backed institutions Lloyds Banking Group and Royal Bank of Scotland, agreed to replace the previous £240 million financial package, which will be welcome news to the company’s shareholders.
The deal will give the retailer some breathing space as it looks to continue its evolution from a predominately CD and DVD seller to a technology and live events specialist with a smaller number of high street stores.
A reduction in borrowings reflects HMV’s lenders’ call for some debt to be reduced using some of the £53 million made from the recent sale of bookselling arm Waterstone’s to Russian billionaire Alexander Mamut’s firm A&NN Capital Fund Management Limited.
Indeed the speed in which refinancing has been secured since Waterstone’s was sold, highlights how important the sale was in securing the business’s short-term future.
Simon Fox, CEO of HMV Group, commented: “We are very pleased to have concluded the new bank facility, which represents another important milestone in securing the financial stability of the group.”
The final 17 weeks of this period saw LFL trading drop by 12.1 per cent compared to the same period last year, and HMV said today that sales continue to follow a similar pattern.
Following refinancing the retailer’s strategy will be to focus on rebalancing its store space and product range through the expansion of its technology offering, as well as exploiting growth opportunities for its Live venues, festivals and ticketing businesses.
One man who was expected to help oversee these changes was Robert Swannell, who had agreed to stay on the board in a non-executive capacity when announcing his departure as HMV Chairman earlier this year.
However, it was revealed today that he will be stepping down from his role as a non-exec director on June 23rd 2011.