Blockbuster Shareholders "Prepare our Legal Representation" Following Chapter 11 Report

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On the other side is the now-famous(ish) CNBC piece from June, in which Julia Boorstin asks Blockbuster CEO Jim Keyes: "Will you file for bankruptcy?" -- to which he responds with a smile and an elusive answer about how this has been a rumor for the last 18 months and how "we've been doing our best job to keep the company out of court." Of course, at the end of last week the Los Angeles Times said a prepackaged Chapter 11's due in mid-September -- with, yet again, downtown-based Blockbuster offering in response a yes-no-maybe non-answer to comers' queries. This time around, though, most figure a reorganization is a done deal -- so too the shuttering of several hundred more stores, for starters.

This morning, Blockbuster Shareholders' leader, Bronx Bomber Niko Celentano, forwarded to Unfair Park a letter he sent first thing today to Jim Keyes, general counsel Rod McDonald and spokesperson Patty Sullivan, in which he takes the company to task for leaving shareholders in the dark. Because, if you'll recall, the May shareholders meeting was pushed to June, at which time Keyes was supposed to announce how the company would recapitalize in the wake of $1 billion in debt. Only, Keyes never announced nothin'. Celentano also reiterates his threats to move forward with legal action should Blockbuster restructure without taking shareholders into consideration. But at 15 cents a share, owning Blockbuster stock is like not owning Blockbuster stock at this point. Celentano's letter is also on the other side.
James W. Keyes
Blockbuster Chairman of the Board and CEO
1201 Elm Street 21st Floor
Dallas, TX 75270

Dear Mr. Keyes,

Today as I write you we have grown to 482 members, representing over 26% of the voting shares of Blockbuster. We have once again had to read another article, this time from the Los Angeles Times, stating that Blockbuster was preparing to file a prepackage bankruptcy sometime in September. With no press release being put out by the company to argue these claims, we must believe there is some truth to this story. Understand that the shareholders have been left in the dark during these recapitalization negotiations. We have received no details regarding these negotiations from the company except to say that "we are making progress".

The Board of Directors fiduciary duty is to negotiate all deals in the best interest of the shareholders to maximize return. You've said a few months ago that we had "more options available to us now than we did at this time last year." If this story is true have all these options fell apart? We have been told since last year about foreign asset sales that were suppose to take place in Q1 of this year. As we now move into the middle of Q3, we have heard no details on this from the company. Did these negotiations fall apart as well? There were also "strategic investors" that the company was talking to as part of the recapitalization. Do these strategic investors still exist?

While we do understand that there are some negotiations that need to be kept quiet until completed, it has been hard to read these stories over and over again in the press. As we are not included in these negotiations, we have had no choice but to rely on the press for information. The company over and over again has mentioned partnerships, investors, and deals it was working on. We have waited months for these to finally take place, to no avail.

With the news out now that Blockbuster is looking to file a bankruptcy, you have left us no choice but to prepare our legal representation should this occur and we as shareholders, not be included in any settlements. Please understand this loyal group of shareholders has stuck with the company through this tough time and fully expect to be part of the turnaround that is ahead. We still are hopeful that Blockbuster will be able to complete an out of court settlement here as this would be in the best interest of all involved.

Sincerely Yours,
Niko Celentano

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