Andre Yoskowitz
10 Feb 2011 19:18
According to a new report, bankrupt movie rental company Blockbuster will put itself up for sale, following a disagreement with its creditors.
The report claims that a bidder would likely offer $300 million, as well as assuming all debt and leases.
Blockbuster went into Chapter 11 bankruptcy last year in an effort to restructure debt and give it a chance to reemerge later. By doing so, the company has kept 3300 stores open but has almost wiped out shareholders and junior bondholders. The company had $1 billion in debt when it filed for bankruptcy.
The leading contender to win Blockbuster in auction is investor Carl Icahn and a consortium led by Monarch Alternative Capital, a large hedge fund. The group and Icahn own about 80 percent of Blockbuster's senior notes and gave Blockbuster $125 million to help fuel the turnaround.
Apparently, the company had poor holiday sales and therefore expects it will need more money. The hedge fund is not willing to pay more than the $125 million invested.