Russian billionaire's £53m deal to save troubled Waterstone's

Alexander Mamut, a friend of Chelsea football club owner Roman Abramovich, plans to reposition Waterstone's as a "regional and local community-orientated bookseller".

But he did not disclose whether his strategy will result in a cut in the current estate of 296 stores in the UK and Ireland. The chain employs some 4,500 staff.

An HMV spokesman said Waterstone's would continue to operate a number of concessions within larger HMV stores, such as the new combined branch in the former Borders site at Edinburgh's Kinnaird Park.

Mamut, who has appointed a book shop entrepreneur to run Waterstone's, said: "The business enjoys a great loyalty from its customers and I believe that there is considerable integrity and value in the brand."

Industry sources said founder Tim Waterstone appeared not to be involved in the deal, despite reports he and Mamut were looking at a joint bid.

The proposed sale, which is subject to a number of conditions, was announced as HMV revealed a further deterioration in its trading performance. Sales for the UK and Ireland were down 18.8 per cent in the 17 weeks to the end of April, leading to its fourth profits downgrade in as many months.

Debts have also climbed by more than expected to about 170m. Talks with lenders over a refinancing are likely to hinge on the successful completion of the Waterstone's sale.

Mamut struck the deal through his investment firm A&NN, which has interests in Moscow bookstore chain Bookberry, as well as Russian publisher Azbuka-Atticus, mobile phone retailer Euroset and social network site LiveJournal.

In order to rejuvenate the struggling chain, Mamut said he planned to appoint James Daunt, a former investment banker. Daunt currently runs a small, eponymous chain of highly regarded London bookshops he founded in 1990.

Mamut added: "This is an important investment from A&NN, which will secure a dynamic future for the UK's largest bookshop chain."

The operation suffered an 11.3 per cent fall in sales over the 17 weeks to 30 April as ebook readers, such as Amazon's Kindle, continued to eat into the traditional bookstore market.

Analysts welcomed the price for the sale, but added the refinancing for HMV would not be straightforward.

HMV chief executive Simon Fox blamed "weak entertainment trends" for the continued poor performance. The group warned yesterday underlying profits for the year just ended will be about 28.5m, down from its previous forecast of 30m.