Blockbuster Receives Final Court Approval Of 'DIP' Financing
DALLAS, Oct. 27 /PRNewswire-FirstCall/ -- Blockbuster Inc. (OTHER OTC: BLOKA, BLOKB), a leading global provider of rental and retail movie and game entertainment, today announced that it has received final authorization from the U.S. Bankruptcy Court for the Southern District of New York to obtain $125 million in "debtor-in-possession" (DIP) financing from certain of the Company's senior noteholders. This funding is available to help Blockbuster meet its obligations to customers, suppliers and employees in the ordinary course as it implements a plan to recapitalize its balance sheet and substantially reduce debt.
The Court had previously authorized Blockbuster access to $20 million of the DIP financing on an interim basis. Today's final order allows Blockbuster to access the entire $125 million facility.
The Court today also approved the retention of certain legal and restructuring advisors and granted Blockbuster authority to pay certain prepetition claims of movie studios and game providers, which will help ensure that Blockbuster's customers will continue to enjoy access to a wide variety of movies, games and television programs, including new releases the first day they become available.
On September 23, 2010, Blockbuster announced that it reached agreement with its senior noteholders on the material terms of a plan to recapitalize its balance sheet and substantially reduce debt from nearly $1 billion currently to an estimated $100 million or less when the plan is implemented. The Company and its domestic subsidiaries filed voluntary Chapter 11 petitions to implement the recapitalization.Blockbuster has subsequently received final court authorization, among other things, to:
- Pay employees in the usual manner and continue their benefits without disruption;
- Continue honoring the Blockbuster Rewards® program, valid coupons, gift cards and other customer programs;
- Continue to maintain cash management systems; and,
- Pay certain undisputed pre-petition obligations of certain essential vendors, suppliers and service providers.
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