Struggling British entertainment retailer HMV has ensured its immediate future by securing a £220m refinancing deal that will see its state-backed lenders take a stake in the firm.
The retailer, which has issued four profit warnings this year, said it had agreed a new loan package with lenders led by Lloyds Banking Group and Royal Bank of Scotland.
The banking syndicate was persuaded to agree the refinancing after HMV last month secured the sale of its Waterstone's book chain to Russian billionaire Alexander Mamut, pledging to use the £53m proceeds to cut debt.
HMV said the deal would see warrants issued to the lending banks. These will represent 5% of the firm's total issued share capital when converted into shares after June 30, 2012. Shares in HMV have lost 86% of their value over the last year.
HMV has struggled to counter falling sales of CDs and DVDs as more consumers shop online and supermarkets compete for business. The group hopes to revive its fortunes by selling more gadgets such as iPads and iPods and by growing its ticketing and festival business.
The group has been encouraged by the performance of six trial stores using the technology-led format and wants to convert another 150 shops to the new format by the autumn.
It said today that current trading was in line with its last update, when it revealed that like-for-like sales at its UK and Ireland stores fell by 18.8% in the 17 weeks to the end of April, while Waterstone's saw an 11.3% fall over the same period.
