It has been a tough month for Blockbuster (BBI), as it was just earlier this month that trading was halted on Blockbuster stock because of rumors that the company had hired bankruptcy attorneys to explore its options. It was reported by Bloomberg, business television, and this blog (Has Blockbuster Busted?), but Blockbuster adamantly denied the rumors, saying that they hired the firm to explore options for restructuring debt.
First, apologies to Blockbuster owners for the misrepresenting the situation, but at the time that was the best information available. However, the company appears to have gotten its money's worth out of hiring the firm because they have successfully restructured lending facility agreements with JPMorgan (JPM) and two of its largest lenders. According to the filing Thursday, this amendment and extension gives Blockbuster short term relief on 65% of the expected aggregate principal amount of the line. That is a big deal and gives Blockbuster a little bit of breathing room.
The operating results for Blockbuster were not all bad either. There was a one-time charge of $435 million that dragged the quarterly results to a loss of about $360 million. Excluding that one-time impairment, the company actually exceeded analysts estimates, bringing in 40 cents a share compared to the 26 cents that the Street expected. Same store retail sales including new and used movies and games were a highlight as they continued to increase for the fourth straight quarter. However, the online rental service was weaker than expected as Netflix (NFLX) retains it dominant position on that market.
Blockbuster still has serious concerns, but at least for now it looks like bankruptcy is not likely. The stock has rebounded back to where it was prior to the false bankruptcy rumors, and with the operating results remaining fairly strong, it appears that most of the drama has calmed down for now.