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HMV rescue deal expected by the end of March - source

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(Globalpost/GlobalPost)

By Neil Maidment

LONDON, March 12 (Reuters) - Administrators at British entertainment retailer HMV will push to secure a rescue deal for the firm before a big quarterly rent bill becomes due at the end of March, a source familiar with the situation told Reuters.

The 92-year-old firm was forced to appoint Deloitte to find a buyer for all or parts of the business in January, after succumbing to a decline in CD, DVD and video game markets as well as increasing competition from supermarkets and online rivals.

Since then Deloitte has announced around 100 store closures and sold HMV's small number of businesses in Hong Kong and Singapore, putting more than 1,700 of the group's 4,000-strong workforce at risk.

A deal to save some or all of the remaining 116 stores is likely to be struck before HMV's rent is due late March, the source said, helping ease the strain of a payment which could prove a big obstacle for HMV to overcome alone.

Deloitte has said it is in talks with a number of unnamed parties interested in HMV. Restructuring specialist and HMV debt holder Hilco, as well as supermarket chain Asda (part of Wal-Mart Stores Inc ) are two of those considering bids, according to media reports.

Deloitte, Asda and Hilco all declined to comment.

A source said no more than five parties were involved in the process, down from over 50 initial expressions of interest.

Retail experts expect the future of the business to revolve around 100 stores and an online offering.

Hilco, which bought HMV's debt in January, giving it a big say in the fate of the group, ranks among the frontrunners to take full control of the firm, due to its relationship with music labels and film studios through its HMV Canada business, bought in 2011.

Unlike rival supermarket chain Wm Morrison, which has been buying stores including some of HMV's to convert into convenience stores, Asda is considering buying the HMV brand and business, according to reports.

http://www.globalpost.com/dispatch/news/thomson-reuters/130312/hmv-rescue-deal-expected-the-end-march-source