I have known about the struggles inside of Blockbuster for several years now. They had gotten to the point that everyone was expecting this, the only issue of debate was when. As of this morning they have filed.
So how will it play out - The agreement with the Bond Holders is to reduce its debt from $900 Million to about $100 Million shedding $800 Million in debt. They will exchange that debt for senior equity in the reorganized company.
There will be no recovery for the current holders of subordinated debt, preferred stock or common stock.
Last piece is the ability for them to establish new financing. They have stated they have $125 Million in new debtor-in-possession financing from senior note holders.
I struggle with seeing Blockbuster making it out of Chapter 11. It is an icon in the US movie rental business, but is way late in moving into the digital realm. I don't think they have enough backing to make a dent in the business that is held well by other companies and other options like On-Demand. I wish them the best, over the years I have met many great people that work for that company. I have had the pleasure of sitting next to their merchants and retail panel speaking engagements.
Another company to watch!
JZ
No comments:
Post a Comment