Turnaround firm Hilco picks up HMV debt to give retailer hope

Hilco, which acquired HMV Canada in 2011 and salvaged home goods firm Habitat, has bought the debt on a discounted basis from HMV’s lenders Royal Bank of Scotland and Lloyds Banking Group. In the firm’s most recent accounts, HMV said it had a £220m million debt facility.

Hilco, led by chief executive Paul McGowan, had been widely regarded as a frontrunner to take full control of HMV due to its relationship with music labels and film studios through its Canadian business.

Sources close to the buyout firm said the acquisition of the debt gave Hilco more “flexibility” over its options for the chain in its negotiations with suppliers and landlords. On Monday, Hilco was appointed to help administrators Deloitte run the business during the administration process.

A spokesman for Hilco  said the company had not disclosed the amount it paid for the debt.

HMV, established in 1921, was the largest among a number of business collapses in the High Street in recent weeks. The company, which has 223 stores and employs 4,120, last week joined DVD rental business Blockbuster, camera retailer Jessops and electronics store chain Comet in administration.

HMV’s main suppliers, who include entertainment giants Universal Music, Warner Music and Sony, are said to be in favour of a complete buyout by Hilco. The suppliers are reportedly planning to offer HMV suitors generous credit terms and cut the price of CDs and DVDs to help keep HMV’s presence on the high street.

Deloitte said last week it had received more than 50 expressions of interest from parties including other retailers, private equity firms and wealthy individuals.

Hilco UK is the European arm of Illinois-based Hilco Trading. Better known as a liquidator in its home country, the US-based business last week re-established a specialist debt acquisition division, Hilco Receivables.