The two firms will become independent publicly traded companies in 2015. The move follows pressure from investor Carl Icahn to spin off the payments ...
The company has one bid of $290 million from existing investors and note holders.
Blockbuster Inc. is looking for a new owner and expects to find one by auctioning off the company.
As part of its move to restructure in Chapter 11 bankruptcy, Blockbuster, No. 34 in the Internet Retailer Top 500 Guide, has accepted a stalking horse bid of $290 million from a consortium of current investors and note holders that includes 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.
A stalking horse bid is an initial bid on a bankrupt company's assets from an interested buyer chosen by the bankrupt company and sets the floor for minimum acceptable bids. No date for an auction has been set.
The auction, which is subject to approval by the U.S. Bankruptcy Court for the Southern District of New York, includes Blockbuster.com and all U.S. and international operations, the retailer says.
“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,” says CEO Jim Keyes. “This will also allow for the consolidation of ownership of the company to those with a clear and focused vision for Blockbuster’s future.”
Blockbuster, which lists total assets of $1.01 billion and debts of $1.46 billion, filed for bankruptcy in September. “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 multichannel content distribution platform,” says Keyes. “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.”
Blockbuster’s move is a series of recent bankruptcy and restructuring activity among big chain retailers and direct marketing companies. Last week Borders Group filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York and Harry & David Holdings Inc. hired a restructuring specialist to help turn around the struggling direct marketer of gourmet fruits, foods and gifts.
Also last week Oriental Trading Co. emerged from bankruptcy after restructuring nearly $500 million in debt.