HMV signs new £220m loan facility
Troubled music retailer HMV has refinanced a lifeline £220m lending facility with its banks but has agreed to give them a five per cent stake to do so.
HMV, which sold its flagship book retail chain Waterstone’s to Russian billionaire Alexander Mamut last month, has signed three separate loan agreements with lenders led by Lloyds Banking Group and RBS.
The refinancing had been eased by the Waterstone’s deal, which will bring in £53m to repay its debts.
But it will also see warrants issued to the lending banks representing five per cent of the firm’s total issued share capital when converted into shares after June 30, 2012.
The maturity date of the facilities is Sept. 30, 2013, with interest payable at four per cent over LIBOR. Exit fees will also be paid.
HMV chief executive Simon Fox said in a statement: “We are very pleased to have concluded the new bank facility, which represents another important milestone in securing the financial stability of the group.”
HMV has issued four profit warnings this year and its shares have lost 86 per cent of their value in the past year.