Hilco Capital is buying DVD rental chain Xtravision out of receivership, giving the UK-based restructuring specialist a second high-profile presence in Irish retailing.
Xtravision appointed Luke Charleton and Colin Farquharson of Ernst & Young as receivers to the business just over seven weeks ago after a downturn in rentals and a withdrawal of credit insurance left it with difficulty meeting liabilities.
Yesterday both Ernst & Young and Hilco confirmed the UK investor has agreed to buy the chain, raising the possibility that its remaining 803 staff and 130 stores can be saved.
Last April, Hilco bought HMV in the UK and Republic, where it was going through separate insolvency procedures. It emerged this week that it plans reopening four of the music retailer’s stores in this jurisdiction.
While Hilco did not say what it is paying, it is not thought that Xtravision’s current owners, the NCB-managed Ulster Bank Diageo Venture Fund and Pageant – owned by businessman Peter O’Grady Walshe and members of the Furlong family – will recoup all of the €22 million they have put into the chain.
The investment fund and Pageant bought Xtravision out of examinership in 2009 for €20 million through a vehicle called Birchall, which put a further €2 million into the company in a second examinership in 2011.
Xtravision will be absorbed into Hilco’s international entertainment retail division, which has $1 billion a year in revenues and includes HMV in the Republic, Canada and the UK.
Hilco Capital chief executive, Paul McGowan, described Xtravision as a “strong brand” and said it would fit well alongside HMV.
However, it is understood that the Irish HMV operation and Xtravision will be kept as separate companies.
The deal includes Xtravision’s head office, in Tallaght, Dublin and all its stock. Hilco’s Irish manager, Larry Howard, said the transfer of the individual stores will take place gradually following talks with the chain’s landlords to regularise its leases.
“We have had supportive messages from a number of landlords and we are, therefore, hopeful that we will be able to retain all of the stores which we have agreed to acquire,” Mr Howard added yesterday.
The company has appointed former Xtravision executive Gerry Butler, who is currently commercial director with Blockbuster in Britain, as the business’s new chief executive.
Commenting on the deal yesterday, Mr Charleton said it would provide a solid financial footing from which the business can be taken forward.
Xtravision rents DVDs and sells DVDs, music, mobile phones, games and home entertainment equipment.