Hilco snaps up HMV debt pile to take control

 
Kasmira Jefford
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HMV was given a potential lifeline yesterday after restructuring firm Hilco bought the crisis-hit music retailer’s debt for about £40m, effectively giving it control of the group.

Hilco – which already owns HMV Canada – confirmed yesterday it had acquired HMV’s debt from the group’s consortium of lenders led by the Royal Bank of Scotland and Lloyds Banking Group, which stood at £176m at the end of October.

Although it has not bought the business itself, the deal will give Hilco a big say in the fate of the 92-year-old group, which collapsed into administration last week.

“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,” the company said in a statement.

Sources familiar with the situation said the next step was working with suppliers to secure new stock for HMV so it can continue to trade.

The group is counting on Hilco’s good relationship with music labels and film studios through its Canadian business, which it bought in 2011.

HMV’s move into administration last week put 4,100 jobs at risk and dealt the latest blow to a retail sector which has seen a string of household names such as Comet, JJB Sports, MFI, and Woolworths fall by the wayside.

Chief executive Trevor Moore said he was “convinced” the music chain still has a future on the high street.

As well as Hilco, Deloitte has received over 50 expressions of interest in HMV, including from private equity firms Better Capital and Endless. Video games seller Game has said it was interested in some HMV stores.

Deloitte joint administrator Nick Edwards said: “Stores continue to trade and at this time we remain hopeful of securing a long-term future for HMV as a going concern.”

HMV’S RESCUER: HILCO

PAUL MCGOWAN
HILCO UK

Restructuring specialist Hilco may be a secretive firm but its presence in the retail sector is ever increasing as a whole host of retailers fall into administration and demand urgent surgery. Paul McGowan, the founding partner of Hilco UK, has already come to HMV’s rescue once before after buying the music retailer’s 125-store Canadian arm in 2011. He also engineered the sale of Habitat to Home Retail Group for £24m in 2011, a deal that saw all but three stores go into administration. Hilco has also wound down the bookseller chain Borders and helped run the closing down sale for retailer Woolworths after missing out on a deal to buy the retail chain for £1 – along with up to £300m of its debt.

McGowan, an accountant by trade, moved from Northern Ireland to London in the 1980s to join KPMG before taking up the post of finance and operations director at Jacqmar. He then moved on to Leslie Fay, a womenswear firm that ran concessions in department stores, where he managed all aspects of finance, administration, supply chain and retail operations. He eventually rose through the ranks to become chief executive. In 2000 he left to set up Hilco UK in a joint venture with its US parent, based in Chicago.