Blockbuster's Financials Worse Than Expected. But It Does Get Debt Repayment Extension.

By Robert Wilonsky Fri., Aug. 13 2010 at 9:00 AM

Categories: Biz, From the RTF Dept.

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Jim Keyes

Now we know why Blockbuster put off announcing its second-quarter financials last night: Says the downtown-based video-and-game-rental giant (well, once), it was getting its noteholders to sign off on a deal allows the company to keep $42.4 mil in debt payments for another few weeks. That's what Blockbuster owes -- and has since July 1, the day the New York Stock Exchange delisted Blockbuster's stock (now worth 18 whole cents). That same evening, Blockbuster announced that the noteholders had agreed to let Blockbuster keep that $42.4 mil -- good thing, since the company only has about $100 mil cash in hand, as opposed to $1 billion in debt. Today's announcement is just more of the same -- the money's due on September 30 now. Till it's not, as the new Forbearance Agreement does allow for even more extensions down the road if necessary.

Blockbuster says it needs that money to buy time to "engage in productive discussions with certain of these noteholders and other strategic parties regarding various recapitalization opportunities."

Blockbuster CEO Jim Keyes was supposed to announce a recapitalization plan at its June 24 shareholders meeting downtown -- that's the reason it pushed back the meeting from its original May date. But it didn't reveal anything: "This is a complicated process," Keyes told Unfair Park after the meeting. "The more parties that have to agree, the more complicated the negotiations become. Good news is we're making progress. We're discussing actively terms and negotiations with debt holders and strategic partners."

He wouldn't say who those partners were then; he isn't saying now -- though there have been hints that, maybe, Comcast is in the mix somewhere, somehow.

"We appreciate the continued cooperation of our senior secured noteholders and the other parties involved in our ongoing recapitalization efforts," Keyes says in this morning's release. "While making progress, this extension allows additional time to complete these complex, multiparty negotiations. To take advantage of its unique multi-channel model and revitalize its global brand, Blockbuster will require an improved capital structure. Our objective is to complete a recapitalization solution as soon as possible so we are better positioned to focus our attention and resources on the strategic opportunities to continue our business transformation."

And maybe there's another reason Blockbuster put off announcing its second-quarters: The numbers took a steeper drop than analysts had been predicting in recent weeks:

Total revenues for the second quarter of 2010 were $788 million, compared to total revenues of $982 million for the same period one year ago.

Net loss for the second quarter of 2010 was $69 million, or $0.32 per share, compared to a net loss of $37 million, or $0.21 per share, in the second quarter of 2009. Net loss for the second quarter was affected by the closure of company-operated stores, the decline in same-store sales, and liquidity issues including costs associated with recapitalization initiatives and lease termination costs.

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