Blockbuster Continues To Explore Various Recapitalization Opportunities, Reaches Forbearance Agreement With Senior Secured Note Holders
DALLAS, July 1 /PRNewswire-FirstCall/ -- Blockbuster Inc. (NYSE: BBI, BBI.B), a leading provider of media entertainment, today announced that it has entered into a Forbearance Agreement with certain of its senior secured noteholders that provides the Company with additional time and flexibility as it continues to engage in productive discussions with certain of these noteholders and strategic parties regarding various recapitalization opportunities.
Blockbuster's Forbearance Agreement is with noteholders who have, collectively, represented that they hold approximately seventy percent (70%) of the Company's 11.75 percent senior secured notes due 2014. Pursuant to the Forbearance Agreement, the noteholders executing it have agreed, through August 13, 2010, from exercising certain rights and remedies they may have under the indenture and related collateral documents arising from the failure by Blockbuster to make the payments owing by it under the senior secured notes on July 1, 2010. The Forbearance Agreement provides that the parties may extend the forbearance period upon written agreement.
Given the terms of the Forbearance Agreement, Blockbuster has determined that it will not make the payments due on the senior secured notes on July 1, 2010, constituting a $23.9 million amortization payment (inclusive of a 6.0% redemption premium) and an $18.5 million interest payment. By taking this action, Blockbuster will preserve $42.4 million in incremental liquidity.
Jim Keyes, Chairman and Chief Executive Officer of Blockbuster Inc., stated, "We appreciate the ongoing support of our senior secured noteholders and other parties involved in our ongoing exploration of recapitalization opportunities. The Company determined that entering into the Forbearance Agreement and not making the payments at this time are in the best long-term interests of the Company and our stakeholders. The agreement provides us with additional time and flexibility as we continue to take steps to implement a more appropriate capital structure to support the Company's strategies for long-term growth and enhanced financial performance as we pursue a balance sheet recapitalization. While we are making progress in our recapitalization efforts and are in the process of negotiating term sheets with these parties, these are complex multiparty negotiations and take time. We currently expect any recapitalization to significantly reduce our debt and increase our financial flexibility.""We continue to manage the business towards maximizing cash and liquidity and monitoring cost reduction opportunities and operational efficiencies," Keyes continued. "At the same time, we remain squarely focused on providing our customers with day-and-date availability of new releases any way and anywhere they want them."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV