Blockbuster Sells Irish Retail Chain28 Aug, 2009 By: Stephanie Prange
Blockbuster Inc. has sold Xtra-vision Limited, its 186-store entertainment retailer in Ireland, to Irish company Birchhall Investments Limited for up to $45 million in cash.
Blockbuster expects to use a majority of the proceeds from the sale for incremental liquidity.
"Today's announcement furthers our goal of improving liquidity and underscores our intent to advance the sale and licensing of our international assets as we focus on the continued transformation of our North American business," said Jim Keyes, Blockbuster chairman and CEO. "Xtra-vision is the leading entertainment chain in Ireland and one of the most recognizable brand names in the country. It has performed very well during our ownership and we believe it is well positioned for ongoing success under the ownership of Birchhall Investments."
Blockbuster purchased Xtra-vision in 1997. With stores throughout the Republic of Ireland and Northern Ireland, the chain offers movies and games for rental and purchase, music, consumer electronics, and mobile phones.
The Dallas-based No. 1 DVD rental chain remains in survival mode as it attempts to slash general and administrative (G&A) costs by $200 million and generate about $150 million in free cash by the end of this year.
Blockbuster is facing a $250 million revolving loan due Sept. 30, 2010, and another $350 million in long-term debt due at the end of 2010.
Analysts contend that even if Blockbuster can pay down its maturities, it must revise its credit agreements next year.
Michael Pachter, analyst with Wedbush Morgan Securities in Los Angeles, said the credit markets have to improve for Blockbuster to survive.
“They’re not on track to repay this debt in the time frame they need to, so they’ve got to extend the terms,” Pachter recently told Bloomberg News.
Blockbuster lost $36.9 million on revenue of $1.02 billion in the most recent quarter.
Additional reporting by Erik Gruenwedel