Blockbuster escapes bankrupcy… for now.
The people at Blockbuster are giving a collective sigh of relief today after selling $150m worth of convertible debt. The stock sale has restored faith in their creditors and ensured a little more time for the sputtering company.
Blockbuster Chief Financial Officer Larry Zine told Reuters that the company felt “a sense of relief and optimism” at completing the offering.
Blockbuster had to raise at least $100 million through the offering in order for the new amendment to its credit agreement to take effect and said last week in a financial filing that it faced potential bankruptcy if it did not complete the offering.
Blockbuster has already obtained two waivers to its debt covenants earlier this year. The latest amendment suspends the requirement that it meet leverage ratios until 2008 and focuses on profit targets.
Officially, Blockbuster says they are in a “down cycle,” and as soon as they get the right product in stores things will pick up. Kiosk.net’s official statement: Enjoy it while it lasts, BB, and I hope you all have good severance packages.