Is Blockbuster Headed for Prepackaged Bankruptcy? One Analyst Thinks So.
Blockbuster CEO Jim Keyes
A few weeks ago, L.A.-based analyst Stan Manoukian told Bloomberg News that downtown-based Blockbuster "will cease to exist by 2013 for sure," for the most part because its bondholders think the debt-ridden company's worth pennies on the dollar. Now, according to Manoukian and Bloomberg, Blockbuster's bondholders are looking to buy out the $1 billion debt for cheap and extend the company a $150-mil bankruptcy loan as part of a prepackaged Chapter 11 plan that would give the bondholders control of the debt restructuring and most of Blockbuster's equity. Says Manoukian, "The bankruptcy writing is on the wall," within six to seven months. And that June 24 shareholders meeting just got a little more interesting.
Meanwhile, Blockbuster CEO Jim Keyes continues his chat with Fast Company. Loads of interesting stuff in there; Gizmodo honed in on one quote in particular, taken slightly out of context, and says "Maybe This Is Why Blockbuster Is Dying." But for our purposes this morning, let's go to the part where Keyes is asked if Blockbuster will indeed file for bankruptcy:
It is not our intention. Our objective is to manage a very challenging liquidity environment. We're doing a lot of things at the same time, and we have to spend a lot of money to build our future. What we couldn't have anticipated was a complete financial meltdown in 2009. If you had to refinance a home last year, imagine what would've happened to you? The bank might've said that they'll give you a mortgage, but the bad news is that you have to pay it back in five years instead of 20 years. Ouch.
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