Unable to lift itself from beneath a nearly $1-billion debt load, Blockbuster today (Thursday) filed for Chapter 11 bankruptcy protection. It said it plans to convert most of its debt into equity under a reorganization with bondholders that hold about 80 percent of its senior notes. Blockbuster said that they had agreed to provide a $125-million loan to allow it to continue operations during the reorganization. Although it said that it plans to keep its stores open and its kiosks operating during the reorganization, many analysts see it stepping up store closures where it can now cancel or renegotiate leases at unprofitable or marginally profitable locations. Operations outside the U.S. are not affected by the filing, and Blockbuster Canada immediately issued a statement on its own to that effect. Last week, Bloomberg and the Wall Street Journal revealed that Carl Icahn, who had been selling off his shares in The Company at pennies on the dollar, had at the same time been acquiring Blockbuster debt and now holds about a third of it.

23/09/2010