has hired restructuring advisers and an investment bank to explore potential acquisitions or partnerships that would help to reduce the video chain's roughly $1 billion debt, the
Wall Street Journal
reports, citing people familiar with the situation.
Blockbuster also has been in discussions with Hollywood Video chain owner
, which filed for bankruptcy protection earlier this month, about acquiring assets, including stores and customer lists.
Blockbuster's bondholders, meanwhile, are holding talks with advisers over reworking Blockbuster's capital structure, such as converting debt to equity, sources told the
A deal likely would focus on negotiating with a group of subordinated bondholders who are owed $300 million, the sources added.
"We don't contemplate filing for bankruptcy," CEO Jim Keyes told the newspaper.
Blockbuster faces increasing competition from players such as Redbox, a unit of
, that operates $1-a-night movie-vending machines in grocery stores and
Consumer preferences are also shifting towards
, a mail-order and online rental service, and towards watching movies and TV shows through on-demand cable services and electronic gadgets such as
Blockbuster shares closed at 38 cents on Tuesday.