Major Parties Reach Agreement on Revised Stalking Horse Bid;
Auction to be Conducted under Section 363
Blockbuster Continuing to Serve Customers in the Ordinary Course
DALLAS, Mar 11, 2011 (BUSINESS WIRE) --
Blockbuster Inc. (OTHER OTC: BLOKA, BLOKB), a leading global provider of
rental and retail movie and game entertainment, announced that the U.S.
Bankruptcy Court for the Southern District of New York has authorized
Blockbuster to conduct an auction process for the Company. The auction
process is designed to achieve the highest and best offer for the
Company's assets and would be conducted under the Court's supervision
and in accordance with Section 363 of the U.S. Bankruptcy Code.
Blockbuster believes the auction process represents the best means of
maximizing value for the Company's stakeholders.
As previously announced, Blockbuster has entered into an asset purchase
agreement with a "stalking horse" bidder, Cobalt Video Holdco, LLC, a
limited liability company formed by funds managed by Monarch Alternative
Capital LP, Owl Creek Asset Management LP, Stonehill Capital Management
LLC and Värde Partners, Inc., each of which is a secured noteholder of
the Company. The Cobalt agreement, which was modified to address certain
objections that were raised prior to a court hearing on March 10, will
serve as the "stalking horse" bid in the auction, which sets the floor
or minimum acceptable bid. At the March 10 hearing, the court denied a
motion seeking to immediately convert the Company's Chapter 11 cases to
liquidation cases under Chapter 7 of the Bankruptcy Code.
Blockbuster expects that its U.S. operations, including a majority of
its stores, DVD vending kiosks, by-mail and digital businesses, will
continue to serve customers in the ordinary course during the sale
process. The Company's international operations in Canada, Denmark,
Italy, Mexico, and the United Kingdom are also expected to conduct
business as usual during the sale process. Blockbuster franchise
locations in both the U.S. and abroad are independently owned, operated
and funded, and will also continue normal business operations.
Jim Keyes, Chairman and Chief Executive Officer, commented, "We are
pleased that the court has authorized us to proceed with the auction
process, which we believe represents the best opportunity to move the
Company forward and maximize value for our stakeholders."
Under the terms of the revised Asset Purchase Agreement (the "APA"),
Cobalt has agreed to purchase substantially all of the assets of
Blockbuster Inc. and its U.S. and international subsidiaries for $290
million, subject to adjustment. The modifications to the original APA
were announced at the March 10 court hearing. The transaction is subject
to the approval of the Bankruptcy Court and the satisfaction of
customary closing conditions.
It is expected that the approved bidding procedures, which will be
embodied in a court order, will require other interested parties to
submit binding offers to acquire the Company within approximately 25
days. Such parties could include additional financial and/or strategic
bidders. Assuming qualified bids are submitted, it is anticipated that
an auction would be held early next month. A final sale approval hearing
is anticipated to take place shortly after the auction with the closing
anticipated to occur shortly thereafter.
The Company and its domestic subsidiaries filed voluntary Chapter 11
petitions on September 23, 2010. Additional information is available at www.Blockbuster.com/recapitalization
or by telephone at 877-660-6684 or 732-645-4110. General information for
Blockbuster customers is available at www.Blockbuster.com
or by calling 1-866-692-2789.
About Blockbuster Inc.
Blockbuster Inc. is a leading global provider of rental and retail movie
and game entertainment. The Company provides customers with convenient
access to media entertainment anywhere, any way they want it - whether
in-store, by-mail, through vending kiosks or digitally to their homes
and mobile devices. With a highly recognized brand and a library of more
than 125,000 movie and game titles, Blockbuster leverages its
multichannel presence to serve nearly 47 million global customers
annually. Information about the Company may be accessed worldwide at www.blockbuster.com.
This release contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements may also be
included from time to time in our other public filings, press releases,
our website and oral and written presentations by management. Specific
forward-looking statements can be identified by the fact that they do
not relate strictly to historical or current facts and include, without
limitation, words such as "may," "will," "expects," "believes,"
"anticipates," "plans," "estimates," "projects," "predicts," "targets,"
"seeks," "could," "intends," "foresees" or the negative of such terms or
other variations on such terms or comparable terminology. Similarly,
statements that describe our strategies, initiatives, objectives, plans
or goals are forward-looking. These forward-looking statements are based
on management's current intent, belief, expectations, estimates and
projections. These statements are not guarantees of future performance
and involve risks, uncertainties, assumptions and other factors that are
difficult to predict. Therefore, actual results may vary materially from
what is expressed in or indicated by the forward-looking statements. The
risk factors set forth under "Item 1A. Risk Factors" in our Annual
Reports on Form 10-K and other matters discussed from time to time in
our filings with the Securities and Exchange Commission, including the
"Disclosure Regarding Forward-Looking Information" and "Risk Factors"
sections of our Quarterly Reports on Form 10-Q, among others, could
affect future results, causing these results to differ materially from
those expressed in our forward-looking statements. Currently, the risks
and uncertainties that may most directly impact our future results
include (i) the ability of the Company to continue as a going concern;
(ii) the Company's ability to obtain Bankruptcy Court approval with
respect to motions in the chapter 11 cases; (iii) the ability of the
Company and its subsidiaries to prosecute, develop and consummate one or
more plans of reorganization with respect to the chapter 11 cases; (iv)
the effects of the Company's bankruptcy filing on the Company and the
interests of various creditors, equity holders and other constituents;
(v) Bankruptcy Court rulings in the chapter 11 cases and the outcome of
the cases in general; (vi) the length of time the Company will operate
under the chapter 11 cases; (vii) risks associated with third party
motions in the chapter 11 cases, which may interfere with the Company's
ability to develop and consummate one or more plans of reorganization
once such plans are developed, including the currently proposed plan;
(viii) the potential adverse effects of the chapter 11 proceedings on
the Company's liquidity or results of operations; (ix) the ability to
execute the Company's business and restructuring plan; (x) increased
legal costs related to the bankruptcy filing and other litigation; (xi)
the Company's ability to maintain contracts that are critical to its
operation, to obtain and maintain normal terms with customers, suppliers
and service providers and to retain key executives, managers and
employees; or (xii) the ability of the Company to perform the terms of
the Asset Purchase Agreement with Cobalt Video Holdco LLC or any other
purchaser that may emerge in the 363 sales process in the chapter 11
cases. In the event that the risks disclosed in our public filings and
those discussed above cause results to differ materially from those
expressed in our forward-looking statements, our business, financial
condition, results of operations or liquidity could be materially
adversely affected and investors in our securities could lose part or
all of their investments. Accordingly, our investors are cautioned not
to place undue reliance on these forward-looking statements because,
while we believe the assumptions on which the forward-looking statements
are based are reasonable, there can be no assurance that these
forward-looking statements will prove to be accurate. Further, the
forward-looking statements included in this release and those included
from time to time in our other public filings, press releases, our
website and oral and written presentations by management are only made
as of the respective dates thereof. We undertake no obligation to update
publicly any forward-looking statement in this release or in other
documents, our website or oral statements for any reason, even if new
information becomes available or other events occur in the future.
SOURCE: Blockbuster Inc.
Corporate Communications, 214-854-4699