The future of ailing music and film retailer HMV looks more secure after suppliers including Universal Music came to its rescue.
The loss-making group, which owns around 250 stores in the UK, said it had signed better terms with key suppliers in a move which will ultimately help it shed around half of its £180m debt pile over the next three years.
The deal is a sign that the music and film industry is willing to support high street retailers at a time when online shops provide intense competition and internet piracy damages trade.
The agreement was enough to persuade the banks — including taxpayer-backed Lloyds Banking Group — to amend existing loan agreements, giving the struggling group more financial headroom. Shares more than doubled following the announcement.
David Joseph, chairman of Universal Music in the UK, said: “HMV is a vital part of the UK music industry and we are delighted that the support of the film studios and music companies is helping to secure its future.”
HMV said the new arrangement will have a “materially positive impact” on its profits and cash-flow.
The chain has felt the pressure of the consumer spending squeeze as cash-strapped customers turn to cheaper deals on the internet for music and film.