Blockbuster Cuts Deal With Bondholders

Blockbuster article updated with background on the events surrounding Blockbuster stock Thursday, including the delisting of Blockbuster stock by the NYSE.

NEW YORK ( TheStreet) -- As its judgment hour appeared to be descending upon it, Blockbuster ( BBI) announced Thursday evening that it had entered into an agreement with its senior secured bondholders, providing it with more time and flexibility to find recapitalization opportunities.

Under the agreement, Blockbuster will not pay the $42.4 million due today. CEO Jim Keyes previously said the company was on track to make this payment.

"The company determined that entering into the Forebearance Agreement and not making payments at this time are in the best long-term interests of the company and its stakeholders," Keyes said in a statement.

Keyes also reaffirmed his commitment to head Blockbuster. The board approved the extension of his contract, which was set to expire the week.

Earlier in the day, the New York Stock Exchange announced that it was beginning the process of delisting Blockbuster stock after the company had failed to approve a recapitalization plan that was necessary to comply with listing requirements.

Blockbuster had announced in a Securities and Exchange filing early Thursday that shareholders did not approve a plan to combine the company's Class A and Class B common stock or the option for a reverse stock split.

Management previously assumed that it had secured the necessary votes during its annual meeting last week, but the final count showed otherwise.

As a result, the NYSE had informed the company that it intended to begin the process of delisting both the Class A and Class B common stock, after it halted trading of Blockbuster stock on Thursday, at 10:42 a.m.

In November of 2009, Blockbuster was notified by the NYSE that its Class A common stock did not satisfy the requirement of an average closing price of $1 per share over a consecutive 30-day trading period. Under the NYSE's rules, Blockbuster had until the annual meeting to cure this deficiency.

-- Reported by Jeanine Poggi in New York


Follow on Twitter and become a fan on Facebook.