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Blockbuster gets reprieve from creditors, reports loss

August 13, 2010|Bloomberg News

Blockbuster Inc., struggling to service $919.6 million in debt, reported a wider second-quarter loss and said it received a six-week reprieve from creditors.

The forbearance agreement is "substantially similar" to the prior one and is effective until Sept. 30, unless earlier terminated, Dallas-based Blockbuster said Friday. The video-retailer's loss grew to $69 million as sales tumbled 20 percent to $788 million.

Lenders have been pushing for a pre-packaged bankruptcy in exchange for an extension on debt and interest payments, three people with knowledge of the situation said earlier this month. Creditors previously granted a 45-day forbearance that expired Friday. The company is seeking potential buyers of assets in or out of bankruptcy, one of the people said.

"We've been transparent throughout this process about the potential sales or licensing of certain international operating assets," said Patricia Sullivan, a Blockbuster spokeswoman, said earlier this month. "These discussions are ongoing."

On Aug. 4, Blockbuster and Comcast Corp., the nation's largest cable operator, began testing a website that directs Comcast customers to join Blockbuster's mail order DVD service.

The initiative is one of several undertaken by Chief Executive Jim Keyes to bolster the retailer's revenue. The company licenses its name as well to NCR Corp., which has introduced more than 6,500 DVD kiosks nationwide.

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