Banks facing PPI Claims dish out cash to HMV
The struggling entertainment retailer HMV, has received a bailout totaling ?220 million from its lenders, that will give the banks a 5% stake in the company.
The loan will last for two years and the lenders include banks such as Lloyds Banking Group and Royal Bank of Scotland, who were bailed out by the state in 2008.
Earlier this year Lloyds set aside ?3.2 billion to pay people seeking compensation for PPI Claims and RBS placed ?850 million for PPI Claims.
The loan should stabilize HMV?s outlook in the short-term, although experts in the City of London have sounded an alert saying that interest on the loan could rise to 14%.
The retailer has faced shrinking sales as consumers turn to the internet and shun traditional high street retailers and in this harsh economic environment it was forced to off-load the book seller Waterstone?s to Alexander Mamut a Russian billionaire in a ?53 million deal in May, as it sought a way to cut its ?170 debt.
The loan effectively gives HMV a timeframe of two years to turn the business around and increase sales. Chief Executive Simon Fox is leading the retailer to more into selling gadgets such as, iPods?, Ipads and headphones.
Six HMV outlets have already switched to this new strategy and are reporting increased sales. Fox is also pushing the retailer into diversifying its business more by producing music concerts and opening art house cinemas with the cinema chain Curzon.
PPI Claims
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