HMV chief executive Simon Fox has ruled out any store closures at the entertainment chain after it secured a life-saving loan agreement with itslenders.
Fox told Retail Week that shop closures or a CVA are not on the horizon for the 240-store retailer, which is already in the process of closing 40 stores as part of plans revealed in January.
“It’s not our plan,” said Fox. “A CVA is absolutely not on the cards.”
HMV negotiated a £220m agreement with a syndicate of eight banks led by RBS and Lloyds. However, it faces an interest rate of up to 14% on £90m of the loan if it has not been repaid by 2013.
The banks are to be given warrants, equal to 5% of the retailer’s shares, which they can convert after June 30, 2012.
Seymour Pierce analyst Kate Calvert said: “The banks clearly have the company over a barrel.”
However Fox argued the deal was “fair” for both the banks and HMV. “We’re heavily incentivised,” he said. He added: “It gives us financial stability. We can now focus on driving the business forward.”
HMV will continue to build on its digital and live venue businesses, while selling more entertainment-related technology. Up to 150 refits will be completed before the critical Christmas trading period, after a six-store trial performed “extremely strongly”, with technology sales in them up 150%.
Fox said HMV will differentiate its technology offer from rivals. “We’re not selling flatscreen TVs. We’re selling a very narrow range of product in a fun, buzzy, entertainment environment.”
Fox did not rule out a rights issue in the future.
HMV said trading is in line with the 15.1% like-for-like slump it reported in its fourth quarter.
Fox said: “We’re facing a tough economic environment combined with structural changes in the categories we operate in. But we’re not relying on any change in that to achieve our plans.
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