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.
Result for: shareholders
On Thursday, Blockbuster filed for Chapter 11 bankruptcy, meaning hundreds of stores will close over the next month as the company restructures.
Through bankruptcy, the company will eliminate about $900 million in debt, leaving the company with $125 million in debt to its senior bondholders. Other bondholders have been wiped out. Blockbuster’s common stock currently trades at 5 cents, meaning for the most part, all long term shareholders have been wiped out, as well.
CEO Jim Keyes said the restructuring will allow Blockbuster to “continue to transform our business model to meet the evolving preferences of our customers.”
Blockbuster has “a well-established brand name, an exceptional library of more than 125,000 titles, and our position as the only operator that provides access across multiple delivery channels — stores, kiosks, by-mail and digital,” added Keyes.
The company has about 3000 stores currently, with plans to close up to 1800 over the next year. 1000 closings were unveiled before the bankruptcy.
Throughout the bankruptcy, all stores and kiosks will remain open for current members.
Result for: shareholders
In January, Eastman Kodak said it was suing RIM and Apple over patent violations relating to the cameras used in BlackBerrys and the iPhone.
Today, Apple countersued Kodak, accusing the film pioneer of violating two digital photography patents that Apple owns.
Apple has accused EK of violating patents 6,031,964 and RE38,911, which are “a system and method for using a unified memory architecture to implement a digital camera device,” and a “modular digital image processing via an image processing chain with modifiable parameter controls.”
Adds Kodak: “As regards our intellectual property, Kodak has a long history of digital imaging innovation and we have invested hundreds of millions of dollars creating our industry-leading patent portfolio. We have an obligation to our shareholders and the other licensees to protect their interests. When others use our technology, we merely seek fair compensation for that use, in the same way that many other leading technology companies pay us to license Kodak technology.”
Kodak currently has 1100 patents relating to digital photography technologies and licenses them to over 30 companies.
