The flailing movie rental chain was unable to make its scheduled $42 million debt payment on Friday, even though shareholders were convinced Blockbuster would pay up.
According to a weeklonng poll of readers of TheStreet, 60.6% of respondents said they believed that Blockbuster would repay some of its $1 billion in debt on Friday, while 39.4% were of the opinion that the company would be unable to fork over the cash.
Well, it looks like those 39.4% of voters were correct (although they will live to vote on this question another day). Indeed, Blockbuster was able to defer the payment until Sept. 30, announcing that it is still in discussions with creditors regarding recapitalization opportunities."We appreciate the continued cooperation of our senior secured noteholders and the other parties involved in our ongoing recapitalization efforts," CEO Jim Keyes said in a statement. "While making progress, this extension allows additional time to complete these complex, multiparty negotiations." This is the second extension Blockbuster has received this summer. Last month, creditors moved the payment up one month. Blockbuster also posted its second-quarter earnings after a delay last night, widening its loss. The company had originally hoped by postponing its debt payment last month it would be able to show creditors business trends are improving, but this doesn't seem to be the case. During the quarter, the company lost $69 million, or 32 cents a share, compared with a loss of $37 million, or 21 cents, in the year-ago period. This was significantly larger than the loss of 24 cents analysts expected. Blockbuster's revenue tanked 20% to $788 million from $982 million, also missing forecasts of $840.1 million. The company attributed to worse-than-expected results on the shuttering of stores over the past year, fewer store customers, and a nearly 30% drop in average subscribers to its by-mail service. Management continues to expect same-store sales to decline in the high-single-digits for the remainder of the year.