LONDON Britain's most high-profile entertainment retailer HMV was handed a lifeline on Friday when a turnaround group bought it, ensuring a future for a firm which gave the Beatles one of their first big breaks.
Opened on London's Oxford Street by English composer Edward Elgar in 1921, HMV was bought by restructuring specialist Hilco in a deal worth about 50 million pounds, a person familiar with the situation said.
The rescue of the firm, whose stores have long been a presence on British high streets, is a timely boost for retailers and suppliers hard hit by the downturn in consumer spending, with many major names disappearing from town centres in the past two years.
This deal safeguards at least 2,500 jobs.
Hilco, which already owns HMV Canada, said it had acquired the business and certain HMV assets, including 141 stores across the country, from administrators Deloitte.
"This is an exciting investment for the Hilco team and we will be able to use some of the developments already progressed in Canada to restore HMV to health," Ian Topping, from Hilco's HMV management team, said.
Hilco said the deal had the backing of landlords and suppliers, all keen to protect a valuable outlet onto Britain's high streets.
"The reaction of the British public to the administration of HMV shows a strong desire for the business to continue to trade and we hope to play a constructive part in delivering that," Topping said.
Famous for its 'Nipper the Dog' logo, HMV struggled to hold its own against supermarkets and online services in sales of CDs, DVDs and video games, and in January it brought in Deloitte to find it a buyer.
To attract sales, it had been focusing on selling in-demand tablets and other devices but Hilco said on Friday that move would be reversed and it would look to "reclaim the space for an enhanced music and visual range".
The group added it was in talks with landlords in Ireland with a view to re-opening the business there which closed during administration.
Turnaround specialist Hilco has been involved in many high profile UK retail restructurings, including Habitat, Woolworths and Borders. Last year it was also brought in to clear stock and close stores at Clinton Cards and JJB Sports.
It had long been seen as the favourite to strike a deal with HMV after it bought the firm's 176 million pounds of debt in January.
The chain will initially be run by a Hilco team working alongside existing HMV management. HMV's chief executive Trevor Moore was made redundant in February.
HIGH STREET RELIEF
In its last full-year results for the year to April 28, 2012, HMV had sales of 923 million pounds but posted a pretax loss of 16.2 million pounds.
To tackle mounting debt, it had already made a string of disposals in recent years, selling off its Waterstone's book chain in 2011 for 53 million pounds and all of its live entertainment business. Since being in administration the firm has also closed its small businesses in Hong Kong and Singapore.
In its 92-year history it has some significant milestones. It had a hand in the Beatles' big break in the 1960s, recommending the group's demo record to publishers.
In 1984, it underlined its status in the industry by opening the world's biggest music entertainment store in London and in 2006 its board rejected an 842 million pound bid from private equity firm Permira, saying it undervalued the group.
Before going into administration, HMV had around 230 stores and over 4,000 staff.
"There is relief all round that HMV's continued presence on the high street is assured," Lavinia Carey, Director General at the British Video Association, said.
"Data shows that 24 million British shoppers bought a video disc in 2012 and 17.4 percent of those were sold in HMV."
Norreena Ingum, a 63-year-old shopper from Somerset in south west England, said she was delighted with the news as she preferred going into a store rather than buying online.
"We shop in here once a month because we haven't got a store in Somerset," she told Reuters. "Everything is here and I can have a good look."
(Writing by Kate Holton and Neil Maidment; Additional reporting by Oxana Andrienko; Editing by Andrew Hay and Sonya Hepinstall and Charlotte Cooper)