Investor Carl Icahn and a group of liquidators made a $310.6 million bid for Blockbuster Inc.’s movie rental business, bettering a $307.1 million bid from Dish Network Corp.
SK Telecom Co., based in Seoul, won’t place another bid and said its prior cash bid of $284.5 million is superior to other bids because it takes on more liabilities for movie studios and covers other costs.
“Our desire has been to acquire this business as a going concern: to preserve relationships with the studios, preserve stores, and relationships with suppliers,” said David Feldman, a lawyer with Gibson Dunn & Crutcher LLP, who represents SK Telecom.
Because SK’s offer would give another $49.5 million to three major motion picture studios -- Sony Corp., Universal Studios Inc. and NewsCorp’s Fox -- its cash offer shouldn’t be seen as comparable with those of other bidders, Feldman said. SK Telecom would also assume $11.5 million in liabilities to all of Blockbuster’s studio partners.
The auction continued into the evening yesterday.
Cobalt Video, a venture between lenders including Monarch Alternative Capital LP, had made a $290 million “stalking horse” bid. Corporate liquidators Gordon Brothers Group LLC and Hilco Merchant Resources LLC also bid. Icahn’s offer was from a group that included Great American Group Inc., Tiger Capital Group LLC, Hudson Capital Partners LLC and SB Capital Group LLC, Karotkin said.
Icahn, who attended the auction, declined to comment when asked what he’ll do with the company if he wins it.
Start of Auction
The auction started with Dish’s bid of $284 million, which would give $142.6 million to lenders who rolled up their debt to give Blockbuster a loan in bankruptcy, and cover $39.9 million in liabilities. Icahn’s first bid, of $280.9 million, would give $134.5 million to roll up lenders, and assume $11.5 million in liabilities, Blockbuster lawyer Stephen Karotkin said.
The opening bids appeared lower than the Cobalt group’s stalking horse bid because of adjustments for cash, inventory, expenses, and varying amounts that the bidders have offered to pay in liabilities to movie studios, Blockbuster spokesman Michael Freitag said.
The case is In re Blockbuster, 10-14997, U.S. Bankruptcy Court, Southern District of New York (Manhattan).