Blockbuster Files for Bankruptcy
Published in CSP Daily News
NCR reaffirms marketing, licensing alliance for Blockbuster Express DVD kiosks
DALLAS -- Movie rental firm and retailer Blockbuster Inc. has filed for bankruptcy and said that it has reached an recapitalization agreement with a group of bondholders to put the company in a stronger financial position as it continues to pursue its strategic plan and transform its business model. Meanwhile, self-service solutions provider NCR Corp. reaffirmed its marketing and licensing alliance with Blockbuster for the Blockbuster Express movie rental kiosk brand and welcomed Blockbuster's refinancing strategy.
The recapitalization plan would substantially reduce the [image-nocss] company's indebtednessfrom nearly $1 billion currently to an estimated $100 million or less when implemented.
To implement this recapitalization, Blockbuster and its domestic subsidiaries have filed voluntary Chapter 11 petitions with the U.S. Bankruptcy Court for the Southern District of New York. Blockbuster's non-U.S. operations and its domestic and international franchisees, all of which are legally separate entities, were not included in the filings and are not parties to the Chapter 11 proceedings.
All of Dallas-based Blockbuster's U.S. operations, including its stores, DVD vending kiosks, by-mail and digital businesses, are open and serving customers in the normal course. Blockbuster is fulfilling all orders as usual, including continuing to provide access to new releases the first day they become available. Blockbuster intends to continue honoring its Rewards program, valid coupons, gift cards and other customer programs.
Blockbuster franchise locations in both the U.S. and abroad are independently owned, operated and funded, and are also continuing normal business operations. In addition, Blockbuster Express vending kiosks, owned and operated through a relationship with NCR, continue their operations in retail locations around the country. The company's international operations in Canada, Denmark, Italy, Mexico, and the United Kingdom are also conducting business as usual.
Jim Keyes, chairman and CEO, former chief of Dallas-based 7-Eleven Inc., said, "After a careful and thorough analysis, we determined that the process announced today provides the optimal path for recapitalizing our balance sheet and positioning Blockbuster for the future as we continue to transform our business model to meet the evolving preferences of our customers. The recapitalized Blockbuster will move forward better able to leverage its strong strategic position, including 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 channelsstores, kiosks, by-mail and digital. This variety of delivery channels provides unrivaled convenience, service and value for our customers."
The company has secured a commitment of $125 million in new "debtor-in-possession" (DIP) financing from the senior noteholders to help meet its obligations to customers, suppliers and employees in the ordinary course during the recapitalization process.
As part of the recapitalization process, the company will evaluate its U.S. store portfolio with a view towards enhancing the overall profitability of its store operations. Currently, all 3,000 of the company's U.S. stores will remain open.
Duluth, Ga.-based NCR owns and operates nearly 7,000 kiosks throughout the United States under the Blockbuster Express brand, and is rapidly growing its automated retail network via kiosk locations at national and regional retail partners. NCR uses its own capital to develop solutions, manage and operate its kiosks and source its own movies. NCR licenses the Blockbuster Express brand.
"Blockbuster has been the pre-eminent brand in the entertainment business for more than 20 years and that brand is a tremendous asset that continues to resonate with consumers as a great movie experience," said Justin Hotard, vice president and general manager, NCR Entertainment. "Our relationship with Blockbuster continues and we welcome their 'business as usual' approach in creating demand for convenient access to entertainment. NCR continues to offer greater value, choice and convenience for consumers through thousands of Blockbuster Express kiosks, making every night a movie night."