In These New Times

Britain’s economic circus as good money(or rather bad money) chases after bad in a frenetic merry-go-round: The government bails out the banks who, in turn, bail out the government and both bailout corporations in the privileged inner circle. Then they all fall down.

Yahoo (Sky News)

7th June, 2011
British taxpayers will become shareholders in struggling entertainment chain HMV as state-owned banks take a stake in the group.

As exclusively revealed by Sky City editor Mark Kleinman, HMV’s lenders will be granted warrants in the company worth up to five percent of the company’s shares after striking a £220m refinancing deal.

The arrangement is designed to give the retailer’s banks the chance to profit from any recovery in HMV’s share price during the coming years.

It has already issued four profit warnings this year.

HMV’s lending syndicate is led by Lloyds Banking Group and Royal Bank of Scotland, the two banks in which the Government owns 83% and 41% respectively.

It is understood the banks’ shareholding in HMV was only due to be triggered if the company failed to repay a bridging loan by raising new equity before the end of March next year.

Kleinman said the deal with the banks will give HMV’s management team two years’ breathing space to execute a plan to secure the company’s long-term survival.

This will focus on pushing sales of new technology products such as Apple’s iPads which generate a higher margin than HMV’s traditional core product base of CDs and DVDs.

Last month, HMV offloaded the Waterstone’s book shop chain to Russian billionaire Alexander Mamut for £53m.

HMV has struggled with competition from cheaper, internet-based rivals, the high street downturn and soaring property costs across its chain of shops.