Coming Soon: New Owners for Blockbuster?
Feb 10th 2011 6:30PM
Updated Feb 11th 2011 7:27AM
Blockbuster may put itself up for sale as early as next week after bondholders in the bankrupt video-rental chain failed to agree on a plan to restructure the company's debt, The Wall Street Journal reported Thursday.
The company could fetch as much as $300 million -- on top of the assumption of its debts and store leases -- in a bid, anonymous sources told the Journal. Billionaire investor Carl Icahn and a group of investors led by hedge fund Monarch Alternative Capital LP, a Blockbuster creditor, are likely to make an offer, according to the publication.
Blockbuster filed for bankruptcy in September after years of lackluster financial performance. The company faced increased competition from DVD-by-mail service Netflix (NFLX), which capitalized on customers' dissatisfaction with Blockbuster's late fees, and from Coinstar's (CSTR) Redbox movie-rental kiosks.
Rentals of packaged media, such as DVDs and Blu-ray disks, fell to about $16 billion in 2010 from $19 billion in 2005, according to a Digital Entertainment Group report released last month.
Blockbuster also suffered from overhanging debt that it took on as part of its 2004 spinoff from its former parent, Viacom.
In the past couple of years, the company has closed roughly 1,000 stores in the U.S. Monarch and Icahn have discussed closing 1,000 more, the Journal reported.
Blockbuster representatives didn't immediately respond to a request for comment from DailyFinance.