HMV has agreed the sale of its Waterstone's bookstore business to Russian billionaire Alexander Mamut for £53 million under increasing pressure by online retail rivals such as Amazon, Play and iTunes.

With debts of around £170 million, and an expectation that annual profits will be 25 per cent of those initially forecast, the chain is also looking at the possibilities of closing some of its high street stores and selling its Canadian business.

"It has become clear that the Group needs to reduce its borrowing requirements in the short term in order to achieve a satisfactory refinancing," says the company in a statement. "The Board has concluded that the most timely and effective way to achieve this is through the disposal of Waterstone’s."

HMV also admits that rival online retailers are at least partly to blame for the group's plummeting sales: "The Group’s Waterstone’s and HMV businesses operate in markets where there is significant structural change driven by digital delivery and intensifying price competition from supermarkets and internet mail order," it says.

It also believes that, by focusing its attention on its music, game and DVD stores, both on the high street and online, it can change its financial fortunes: "The sale of Waterstone’s will enable management to focus more closely on executing the turnaround at HMV and continuing to develop the HMV customer offering."

Mamut, who will buy Waterstone's through his firm A&NN Capital Fund Management, will be carrying out a review of the book chain's business. It currently comprises 296 stores and employs around 4,500 people.

He has already made one change, and will employ James Daunt, who currently runs six eponymous independent book shops in London, as the new Waterstone's chief. He also believes that community bookstores should remain, regardless of the assault on sales by Amazon (who recently announced that Kindle book sales were overtaking print editions in the UK and US): "The opportunity ahead to reposition Waterstone's as a regional and local community-orientated bookseller is an exciting one," he said.

"The business enjoys a great loyalty from its customers and I believe that there is considerable integrity and value in the brand."

Pic by Flickr / comedy_nose