Blockbuster: No Plans to File for Bankruptcy

Blockbuster (BBI) Tuesday afternoon confirmed in an interview with Tech Trader Daily that the company has hired Kirkland and Ellis “for assistance with our ongoing financing and capital raising initiatives,” but added that “we do not intend to file for bankruptcy.”

Blockbuster spokeswoman Karen Raskopf said the company will provide an update on its refinancing efforts on its March 19 earnings call.

She noted that the company said on its third-quarter earnings call that the company has a $28 million term loan and a revolving credit line that come due in August 28. The company’s most recent balance sheet shows a total $209 million of long-term debt classified as short term.

Trading in Blockbuster shares is currently halted. Before the halt, the stock was down 75 cents, or 78.2%, after Bloomberg

reported

that the company had hired Kirkland and Ellis and was considering a pre-packaged bankruptcy.

Comments

[Marcap]

Unfortunately I think that Blockbuster should have gone bankrupt a long time ago, as they clearly do not know how to run a business. After all, let's face it... How is it possible to have quarterly revenues of $1.2B with a Gross Profit Margin of $643M (53.6%), and yet end up with a loss of $20.6M, if you know what you are doing? Either some people are being extremely overpaid, or else they pay far too much for location rents. And as for declining sales, sure, blame some of it on the Internet and downloadable videos. But that aside... Paying 1/4 to 1/3 as much to rent a movie for 1 or 2 days, as you can buy it elsewhere for, just does not cut it as far as I am concerned.

2009 Mar 03 09:31 PM

[Sekar]

Blockbuster's earlier CEO John Antioco was one of the biggest corporate idiots, joining the ranks of disgraced and fallen guys like Jack Welch (GE is now $6), Charles Prince, Immelt and numerous idots. The current 7-Eleven savior has no clue on how to run this business. Are the board members in a drunk state? Blockbuster will eventually collapse. Hollywood studios are going to realize that their tight grip over content distribution will come to an end sooner than they think. Customers are not willing to pay $4 to rent movies and watch. Movie distribution and consumption will go the way like music has become and no one has time to step into a store to checkout content. How much will I pay to watch a movie? Not more than 50 cents. The studios and their overpaid stars should realize that sky high production costs will eventually kill movie distribution. The entire movie industry requires a shake-out and the time is right now. Look at how many stuios have scrapped costly productions. The country has plenty of talented faces and studios should promote new blood in movies rather than overpaying existing actors. That way production cost will reduce and consumers can pay less to watch a movie. The collapse of Blockbuster will be a death knell to retail movie distribution in US.

2009 Mar 04 10:35 AM