Blockbuster Adds Dissident to Board, Works With Bondholders on Debt Cuts
Blockbuster Inc., the money-losing video-rental chain, agreed to add dissident shareholder Gregory S. Meyer as a director and said it’s working with bondholders to restructure its debt.
Chief Executive Officer Jim Keyes told investors at the annual meeting in Dallas that time is “of the essence” in the efforts to refinance. Blockbuster, with $900 million in debt, faces an $18.5 million July 1 interest payment on $630 million of 11.75 percent bonds, according to data compiled by Bloomberg.
The company has lost more than $1 billion in the past three years amid store closings, declining sales and competition from newer competitors in the DVD arena, including Netflix Inc. and Coinstar Inc.’s Redbox video-rental kiosks. Blockbuster, the largest U.S. video retailer, is trying to reconfigure its finances and operations at the same time, Keyes said.
Blockbuster fell less than 1 percent to 28.5 cents at 4:04 p.m. in New York Stock Exchange composite trading. The company had a market value of about $59 million.
Meyer, who founded the DVDXpress company in 2001 that rented DVDs through kiosks, had sought to replace incumbent Gary Fernandes. The company said today all nominees were elected.
Blockbuster also said investors overwhelmingly approved combining the Class A and Class B common shares into a single stock. They also backed plans for a reverse split as part of the company’s compliance plan with the New York Stock Exchange.
The retailer said in March it was seeking to refinance its debt and could be forced to seek bankruptcy protection.
DVD Terms
In April, the company won more favorable DVD terms from News Corp.’s Twentieth Century Fox and Sony Corp.’s film studio, part of a drive to cut costs. In exchange for the new payment terms, the studios obtained a first lien on Blockbuster Canada Co. chain’s assets. Blockbuster Canada will continue to operate as usual, the company said.
On June 22, the retailer submitted a confidential plan to boost its market capitalization and keep its New York Stock Exchange listing, according to regulatory filings. The company also plans a reverse stock split.
Blockbuster’s $630 million of 11.75 percent bonds due in 2014 were quoted at 61 cents on the dollar on June 14, down from 71 cents on May 4, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
To contact the reporter on this story: Ronald Grover in Los Angeles at rgrover5@bloomberg.net.
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