Blockbuster on the Block
Fifty-seven percent of respondents to a RetailWire poll
last September said that Blockbuster would emerge as a "somewhat" or "much
coming out of Chapter 11 bankruptcy protection. Well, the video entertainment
chain is still going through its reorganization, but a new twist has been added.
A group of note holders in Blockbuster have joined together to make a "stalking
horse" bid for the company.
The investors, Monarch Alternative Capital,
Owl Creek Asset Management, Stonehill Capital Management and Värde Partners,
have formed Cobalt Video Holdco, LLC, with no real intention of acquiring Blockbuster.
The purpose of the bid, reported at $290 million for the chain’s assets, is
to set a minimum acceptable bid for another buyer to acquire Blockbuster.
it did when it announced it was seeking Chapter 11 protection last year, Blockbuster
said it expected to continue operating as usual while the sale process goes
"By initiating a sale process at this time, we intend to accelerate our
Chapter 11 proceedings and move the company forward. An auction will allow
the company to invite competing bids from both strategic and financial investors.
This will also allow for the consolidation of ownership of the company to those
with a clear and focused vision for Blockbuster’s future," said
Jim Keyes, chairman and chief executive officer of Blockbuster, in a statement.
"The purchaser will be able to take full advantage of Blockbuster’s
many strengths, which include an internationally recognized brand name, an
exceptional library of more than 125,000 titles, millions of loyal customers,
and a multi-channel content distribution platform," Mr. Keyes said. "Because
of its ability to deliver physical content (through DVDs) and digital content
(through streaming), Blockbuster can offer customers the unique ability to
access any movie, any time."
Companies interested in getting in on the
Blockbuster bidding will have roughly 30 days following court approval to submit
bids for the company. An auction will be held approximately one week later
with the closing expected to take place by April 20 at the outside.
- Blockbuster Initiates Process to Sell Company, Enters Into Stalking Horse
Purchase Agreement with Investor Group – Blockbuster Inc.
Discussion Questions: What is the best possible scenario for Blockbuster coming out of the bidding process for the chain? What is the worst?