Bloomberg, Yet Again, Comes Bearing Grim News About What Lies Ahead For Blockbuster
A little more than one year ago, Bloomberg News sent Blockbuster's stock price tumbling, from 77 cents to 22 cents, with a report that the Renaissance Tower-based company had hired outside counsel to "explore a possible bankruptcy filing," which Blockbuster quickly dismissed. This morning, Bloomberg again all but predicts the inevitable demise of Blockbuster in a lengthy piece headlined "Blockbuster Bondholders Betting Company Will Go Out of Business."
Long story short: Analysts and investors don't believe the company can fend off Netflix and Redbox while also paying down nearly $1 billion in debt ($390 million of which comes due in 2012). As far as bondholders are concerned, the company's worth about 76 cents on the dollar, even if were to restructure in bankruptcy -- which CEO Jim Keyes has said ain't gonna happen despite that SEC filing in March. Says Stan Manoukian, a Los Angeles-based analyst, Blockbuster "is slowly dying. It will cease to exist by 2013 for sure." To which Blockbuster's chief financial officer, Tom Casey, responds, "A large-scale liquidation is nothing we have planned."
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