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Blockbuster Dealt Another Blow

Blockbuster can't catch a break, as a proxy advisory firm recommends an activity shareholder to the company's board.



) - It's another blow for


(BBI) - Get Report

, as a proxy advisory firm recommends the company appoints an activist investor who has been attempting to get on its board.

RiskMetrics said on Tuesday that Gregory S. Meyer, who has been a thorn in Blockbuster's side recently, "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."

Blockbuster, on the other hand, has argued that Meyer's experience does not make him a good fit


Meyer's bid is a "hostile, self-serving proxy contest," the company said last month. The video rental chain also insists Meyer is not qualified for the job and, if elected, would be a risk to the future of Blockbuster.

Meyer founded a DVD rental kiosk business in 2001 called DVDXpress and later sold it to Coinstar, whose Redbox kiosks have become a major competitor with Blockbuster.

Meyer is trying to replace Gary J. Fernandes, chairman of FLF Investments, a real estate investment company.

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Shares of Blockbuster rallied Tuesday morning, surging 16.7% to 25 cents. On Monday the stock had lost nearly 19% of its value. The

Wall Street Journal

reported late last week that

the movie rental firm is currently in the process of attempting to secure $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.

Earlier in the year, Blockbuster warned that a Chapter 11 filing was a possibility if it did not find enough cash to repay its nearly $1 billion in debt. But the

Wall Street Journal

said it is unlikely the company would file for bankruptcy before its annual meeting on June 24.

-- Reported by Jeanine Poggi in New York.

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