Blockbuster Misses Another Interest Payment2 Sep, 2010 By: Erik Gruenwedel
Fiscally challenged Blockbuster Inc. Sept. 2 said it missed a Sept. 1 interest payment to holders of a junior secured note or bond.
Dallas-based Blockbuster, which has twice agreed to forbearance agreements (debt extensions) with holders of its senior secured notes, is on the hook to pay a $42.4 million interest payment on those notes by Sept. 30.
The DVD rental chain, according to media reports and analysts, is expected to file a pre-packaged bankruptcy prior to the interest payment deadline.
In a regulatory filing, Blockbuster said it was precluded from paying the bi-annual interest payment on the junior notes due to nonpayment of its senior notes obligations.
The chain is struggling to recapitalize or restructure more than $980 million in debt as it diversifies distribution of movie rentals via Blockbuster Express kiosks, by-mail, Blockbuster On Demand, mobile phone and smaller footprint of retail stores.
Blockbuster shares Sept. 2 closed down 1 cent to 7 cents per share in medium trading.