Report: Blockbuster may be nearing bankruptcy
2:53p ET June 11, 2010 (MarketWatch)
CHICAGO (MarketWatch) -- Blockbuster Inc. is negotiating with its bondholders for a loan package that would help it operate while in bankruptcy, according to a press report.
The Wall Street Journal, citing unnamed sources, reported Friday that the video rental chain is looking for $150 million in debtor-in-possession financing. Blockbuster is currently $900 million in the hole and may well be forced to seek Chapter 11 protection from its creditors.
However, the newspaper also reported that the company is in talks with possible partners about an infusion of cash that would help lower-ranking bondholders owed $300 million convert their debt to equity, this person said.
The company has been battered by competitors including Netflix and RedBox, along with the increasing penetration of video-on-demand services --often with many free offerings -- by cable and satellite TV operators. It has been closing stores at a steady clip and at the time of its last earnings report in May, reported a first-quarter loss on steadily declining sales volume.
The shares have shriveled in the wake of all the bad news and are currently trading at 28 cents, down from a 52-week high of $1.56 and all-time crest of $30 back in 2002.
Earlier this week, the company released the recommendation from Glass, Lewis & Co., an independent proxy advisory firm that urged shareholders to stick with its choices for the board of directors. Blockbuster has been engaged in battle with investor Gregory S. Meyer, who is seeking a seat in the board election, scheduled for June 24.
The company said that Glass, Lewis suggested that shareholders elect its seven 2010 director nominees and other proposals because Meyer has failed to come up with "a cogent, practicable plan" for the future. |
