Blockbuster to be sold; opening bid set at $290 million
Home video chain Blockbuster Inc., in bankruptcy, has opted to put itself up for sale after creditors were unable to agree on a recapitalization plan.
The Dallas-based company said Monday that it has submitted a plan for an auction process to U.S. Bankruptcy Court in New York. A holding company formed by four if its largest creditors -- Monarch Alternative Capital, Owl Creek Asset Management, Stonehill Capital Management and Varde Partners -- has submitted an opening "stalking horse" bid of $290 million.
The offer is intended to create a floor for future bids, though if none come in, the company would end up in the hands of those creditors.
Billionaire corporate raider Carl Icahn, the largest owner of Blockbuster's debt, is not part of the stalking horse bid.
In a statement, Blockbuster Chief Executive Jim Keyes said the company hopes to draw offers from both strategic and financial investors. "This will...allow for the consolidation of ownership of the company to those with a clear and focused vision for Blockbuster's future," he said.
When Blockbuster filed for Chapter 11 bankruptcy protection in September, the owners of $630 million of its senior secured bonds said they intended to exchange their debt for full ownership of the company. That plan appears to have fallen apart in Bankruptcy Court proceedings, however, leading to the new sales process.
[Update, 5:43 p.m.: For more, see the story on the pending sale of Blockbuster in tomorrow's Times.]