HMV saw its shares leap after it agreed a life-saving refinancing deal with its bank, only to see them fall back again as investors took stock of the onerous terms imposed and the major structural challenges still faced by the group.
Interest will be paid at 4 per cent above the London Interbank Offered Rate (Libor) on the new £220m revolving credit facility, but the first £90m will be subject to an exit fee when it is repaid, starting at 5 per cent a year but ratcheting up to 14 per cent if the loan is still outstanding by January 2013. The deal is also conditional upon the payment of a chunk of the £53m it's receiving from the sale of Waterstone's and the suspension of dividends, while banks also receive warrants representing 5 per cent of the issued shares.
