Blockbuster Raises $675 Mln In Debt

DALLAS (AP) — Blockbuster Inc. said Friday that it closed a $675 million debt offering due in 2014, nearly twice as much money as the rental-video chain had hoped to raise as it takes steps to improve its finances.

The Dallas-based company said it remains on track to cut expenses by $200 million this year, with $166 million already reduced in the first half. It will continue to seek ways to boost efficiency, including divesting of non-core assets outside North America.

The refinancing eases the financial pressure on Blockbuster as it tries to adapt to DVD-by-mail, standalone rental kiosks and online-delivery systems that are turning hundreds of its stores into albatrosses. The company is trying to manage the shift to these new ways of video delivery without alienating its customer base who still drive to a Blockbuster rental store.

The senior secured notes carried an interest rate of 11.75 percent and was issued at 94 percent of par value. The company said it will use the funds to repay the remainder of what it owes under a revolving credit facility and other debt instruments.