Blockbuster Inc.’s auction to sell its movie rental business began as Dish Network Corp. made the highest of five different bids, with the offers pitting liquidators against buyers who would reorganize the bankrupt company.
The second highest bid as the auction began was from billionaire investor Carl Icahn and a team of four liquidators, Blockbuster lawyer Stephen Karotkin said in Manhattan court today.
Cobalt Video, a venture between lenders including Monarch Alternative Capital LP, which had made a “stalking horse” bid, had offered the highest bid as of 11 a.m., when the auction was broken off to evaluate the various offers.
SK Telecom Co. also bid for Blockbuster, as did corporate liquidators Gordon Brothers Group LLC and Hilco Merchant Resources LLC. 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.
“We spent hours into the early morning analyzing the bids,” Karotkin told a packed courtroom where the formal auction began this morning, to take overbids in $1 million increments.
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 bid, of $280.9 million, would give $134.5 million to roll up lenders, and assume $11.5 million in liabilities, Karotkin said.
Blockbuster spokesman Michael Freitag said the opening bids for today’s auction appeared lower than the Cobalt group’s $290 million 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.
The case is In re Blockbuster, 10-14997, U.S. Bankruptcy Court, Southern District of New York (Manhattan).