HMV, the embattled high street music retailer, has said that it will be selling Waterstone's bookstore chain to A&NN Capital for £53 million.
The deal is likely to be completed by the end of June, just in time to help HMV pass the tests on its lending facility on 2 July, the date set by HMV's lenders when it indicated it could fail the tests if they were held earlier as originally scheduled.
In addition to raising money from the disposal HMV said it had achieved a quarter of its £10 million cost savings target by restructuring the head office. The group has also closed 19 HMV stores and 15 Waterstone's stores and will be closing 13 further HMV stores in the near future.
A&NN Capital is run by a trust in which Alexander Mamut has an interest. Mr Mamut is a Russian businessman who was at one time close to former Russian President Boris Yeltsin.
HMV said that following the sale it expected group pre-tax profit for the year to be around £28.5 million and net debt to be around the £170 million mark.
Keith Bowman, analyst at Hargreaves Lansdown, said that rumours had been circulating of a sale and confirmation of the move would be welcomed by investors, adding that the price of £53 million is slightly higher than the board of the company might have expected.
Mr Bowman added that conditions will remain tough for HMV, as it faces stiff competition from online retailers such as Amazon, although being the last of the high street music retailers does provide HMV with a small advantage.
Simon Fox, Chief Executive of HMV, said, "Having fully explored the options available to it, the Board believes that a sale of Waterstone's to Alexander Mamut provides a good new home for the business. We expect this deal to enable the Group to achieve a reduction in the Group's borrowing requirements, and, in turn, focus on plans for transforming the HMV Group into a broad-based entertainment business."
By 09:20 shares in HMV were up 2.91 per cent on the FTSE All Share to 10.25 pence per share.