NEW YORK (
shareholder meeting isn't normally one of the most noteworthy events of the financial year. But this year, as investors anxiously await news of whether or not the movie-rental retailer will file for bankruptcy, the annual meeting promises to be a, well ... blockbuster.
Blockbuster is currently in the process of trying to find ways to repay its nearly $1 billion in debt. Heightened competition with
Redbox DVD kiosks and
has put pressure on Blockbuster's sales, and earlier in the year CEO James Keyes said if the company did not shore up enough cash it might be forced to file Ch. 11.
Last week, the
Wall Street Journal
reported that Blockbuster is currently in the process of attempting to secure a $150 million debtor-in-possession loan, which is sometimes arranged as a backup plan in the event that a company and its bondholders fail to strike a deal.
CEO James Keyes would not confirm or deny this claim, saying: "This is a work in progress; you can't pick anyone piece or make any speculation. I wish I had answers, but all I can say is we are making progress."
Investors will hope to get more answers than that at the meeting meeting, as the stock currently trades at about 30 cents a share, having lost 40% of its value since mid-May.
Another hot topic will be the outcome of a proxy battle with dissident shareholder Gregory S. Meyer, who is attempting to get elected to the board of directors. Blockbuster has said that Meyer's bid is a "hostile, self-serving proxy contest," and if elected, would be a risk to the future of the company.
Still, several advisory firms, including RiskMetrics, have thrown their support behind Meyer. RiskMetrics said last week that "
Meyer would be aligned with shareholders, has demonstrated that change is warranted, has relevant skill sets and industry knowledge and, therefore, is likely to add value to board deliberations."
Meyer founded a DVD rental kiosk business in 2001 called DVDXpress and later sold it to Coinstar.
-- Reported by Jeanine Poggi in New York.
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