Blockbuster up for sale

DALLAS — Home video chain Blockbuster Inc. has opted to put itself up for sale after a previous bankruptcy reorganization plan collapsed and its business continued to deteriorate over the holidays.

The struggling Dallas company submitted a plan Monday for an auction process to U.S. Bankruptcy Court in New York. A holding company formed by four of its largest creditors — Monarch Alternative Capital, Owl Creek Asset Management, Stonehill Capital Management and Varde Partners — has put in an opening "stalking horse" bid of $290 million.

The offer is intended to draw other buyers and create a floor on a price. If no other bids are submitted, however, the four creditors would end up controlling the DVD rental and sales company.

"This will ... allow for the consolidation of ownership of the company to those with a clear and focused vision for Blockbuster's future," Blockbuster Chief Executive Jim Keyes said.

Billionaire Carl Icahn, the largest owner of Blockbuster's debt, is not part of the stalking-horse bid but could still make a play for the company. He rapidly bought up the company's bonds in late summer and early fall of 2010, leading some in the entertainment industry to believe he was looking to take control and potentially combine it with the movie studios Metro-Goldwyn-Mayer and Lions Gate Entertainment, which he also was pursuing.

Blockbuster filed for bankruptcy protection in September. During the five weeks that ended Jan. 2, Blockbuster had a net loss of $11.7 million on $206.5 million in revenue. The company has continued to cut costs in the meantime. It is scheduled to begin closing 609 of its roughly 3,400 U.S. stores by Feb. 28.

In its court motion requesting that it be allowed to find a buyer, Blockbuster said that was the company's only remaining option to continue operating and avoid liquidation.

Share This Story