Finance deal is music to HMV's ears

HMV, the entertainment retailer battling against supermarket competition and downloading, is on the verge of agreeing a two-year refinancing deal with its lenders.

Chief executive Simon Fox is understood to be working on the terms of the new loan package worth about 210 million with lenders led by Lloyds Banking Group and Royal Bank of Scotland.

Those terms are expected to be signed in the coming weeks and would draw a line under recent uncertainty over the future of the chain, which has struggled to counter falling sales of CDs and DVDs as more consumers shop online or download files directly.

HMV's debts have also risen to a bigger-than-expected 170m in recent months.

Reports yesterday suggested the group's banking syndicate had been persuaded to offer a new funding deal following HMV's recent sale of the Waterstone's book chain for 53m to Russian Alexander Mamut.

It is thought that lenders will want to see the company pursue a new strategy focusing more on the sale of hi-tech gadgets such as iPods and tablet computers like the iPad.

Poor sales have led to four profit warnings in six months but Fox has been encouraged by the performance of six trial stores using the technology-led format. He is said to want a further 150 shops to adopt the new focus by the autumn.