DALLAS, July 1 /PRNewswire-FirstCall/ -- Blockbuster Inc.
(NYSE: BBI, BBI.B), a leading provider of media entertainment,
today announced that it has entered into a Forbearance Agreement
with certain of its senior secured noteholders that provides the
Company with additional time and flexibility as it continues to
engage in productive discussions with certain of these noteholders
and strategic parties regarding various recapitalization
opportunities.
Blockbuster's Forbearance Agreement is with noteholders who
have, collectively, represented that they hold approximately
seventy percent (70%) of the Company's 11.75 percent senior secured
notes due 2014. Pursuant to the Forbearance Agreement, the
noteholders executing it have agreed, through August 13, 2010, from exercising certain rights
and remedies they may have under the indenture and related
collateral documents arising from the failure by Blockbuster to
make the payments owing by it under the senior secured notes on
July 1, 2010. The Forbearance
Agreement provides that the parties may extend the forbearance
period upon written agreement.
Given the terms of the Forbearance Agreement, Blockbuster has
determined that it will not make the payments due on the senior
secured notes on July 1, 2010,
constituting a $23.9 million
amortization payment (inclusive of a 6.0% redemption premium) and
an $18.5 million interest payment.
By taking this action, Blockbuster will preserve $42.4 million in incremental liquidity.
Jim Keyes, Chairman and Chief
Executive Officer of Blockbuster Inc., stated, "We appreciate the
ongoing support of our senior secured noteholders and other parties
involved in our ongoing exploration of recapitalization
opportunities. The Company determined that entering into the
Forbearance Agreement and not making the payments at this time are
in the best long-term interests of the Company and our
stakeholders. The agreement provides us with additional time and
flexibility as we continue to take steps to implement a more
appropriate capital structure to support the Company's strategies
for long-term growth and enhanced financial performance as we
pursue a balance sheet recapitalization. While we are making
progress in our recapitalization efforts and are in the process of
negotiating term sheets with these parties, these are complex
multiparty negotiations and take time. We currently expect
any recapitalization to significantly reduce our debt and increase
our financial flexibility."
"We continue to manage the business towards maximizing cash and
liquidity and monitoring cost reduction opportunities and
operational efficiencies," Keyes continued. "At the same
time, we remain squarely focused on providing our customers with
day-and-date availability of new releases any way and anywhere they
want them."
The Blockbuster Board of Directors recently approved an
extension of Keyes' contract to continue his service as Chairman
and CEO. Keyes added, "I have reaffirmed to the Board and our
management team my commitment to facilitate the recapitalization
and to continue the business transformation of Blockbuster."
Forward Looking Statements
This press release contains "forward looking statements" – that
is, statements related to future, not past, events. In this
context, forward looking statements often address our expected
future business and financial performance, and often contain words
such as "expect," "intend," "plan," "believe," "seek," or "will."
Forward looking statements by their nature address matters
that are, to different degrees, uncertain. For us, particular
uncertainties that could adversely or positively affect our future
results include, among others, from time to time: (i) whether our
operating results continue to decline and whether we are able to
generate sufficient cash flows to meet our liquidity needs; (ii)
whether we will have sufficient cash flows from operating
activities and cash on hand to service our indebtedness and finance
the ongoing obligations of our business; (iii) whether we are
able to execute proposed strategies to recapitalize or restructure
our balance sheet; (iv) whether we are able to execute our
transformational strategies; and (v) other factors, as described in
our filings with the Securities and Exchange Commission, including
the factors discussed under the heading "Risk Factors" in our
annual report on Form 10-K for the year ended January 3, 2010 and under the heading "Disclosure
Regarding Forward-Looking Information" in our quarterly reports on
Form 10-Q. This cautionary statement is provided pursuant to
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These uncertainties may cause our
actual future results to be materially different than those
expressed in our forward looking statements. We do not
undertake to update our forward looking statements.
About Blockbuster Inc.
Blockbuster Inc. is a leading global provider of rental and
retail movie and game entertainment. The company provides customers
with convenient access to media entertainment anywhere, any way
they want it - whether in-store, by-mail, through vending kiosks or
digitally to their homes and mobile devices. With a highly
recognized brand and a library of more than 125,000 movie and game
titles, Blockbuster leverages its multichannel presence to serve
nearly 47 million global customers annually. The company may be
accessed worldwide at www.blockbuster.com.
SOURCE Blockbuster Inc.