Blockbuster denies bankruptcy rumors
Movie and game rental company Blockbuster Inc. denies news reports suggesting that the company hired an outside party to help the company organize strategic alternatives, including a possible filing for bankruptcy protection.
A spokeswoman for Dallas-based Blockbuster Inc. (NYSE: BBI) told the Dallas Business Journal Tuesday afternoon that Blockbuster did hire Kirkland & Ellis as a consultant to assist with capital-raising initiatives, but says bankruptcy is not a strategy the company is pursuing.
The spokeswoman says Blockbuster has a bank facility that is due in August, and the company is hoping to get another facility in place by the time the first line of credit expires. The spokeswoman said even without a new credit facility, Blockbuster, if it had to, could fund its business through the rest of the year. But she added, the company hopes that will not be necessary, so it is exploring financial options. She reiterated that a Ch. 11 bankruptcy filing is not one of those options.
Blockbuster saw its stock price fall 77 percent Tuesday afternoon following news reports that the company is considering filing for bankruptcy protection.
Bloomberg cited an unnamed source Tuesday, who indicated that the Dallas-based retailer had asked legal counsel Kirkland & Ellis LLP to help the company explore strategic restructuring options, which could include a “pre-packaged” or “pre-arranged bankruptcy,” Bloomberg said in its report.
By mid-afternoon on Tuesday, Blockbuster’s (NYSE: BBI) stock had dropped close to 80 percent and was trading at 22 cents per share.
Blockbuster is listed in the Dallas Business Journal’s 2009 Book of Lists as one of the Dallas-Fort Worth area’s largest publicly traded companies, with 59,643 employees worldwide. It is ranked No. 21, with $5.54 billion in revneue in 2008.
Blockbuster has 8,000 stores in the U.S. and in 22 other countries.