Wattles Ups Blockbuster Stake, Standard & Poor’s Lowers Credit Grade18 Feb, 2010 By: Erik Gruenwedel
Mark Wattles, who sold Hollywood Video to Movie Gallery for $1.1 billion in 2005, has quietly acquired more than 13 million shares of Blockbuster common stock since the beginning of the year, giving him 5.1% ownership of the Dallas-based DVD rental company’s outstanding shares.
The shares, totaling more than $5.2 million, were purchased through two privately held investment companies for prices ranging from 28 cents to 40 cents per share, according to a regulatory filing.
Separately, Standard & Poor’s Feb. 17 revised downward its rating on Blockbuster to “CCC” rating, indicating the company is vulnerable to defaulting on its debt obligations.
The ratings company said Blockbuster has sufficient liquidity in the near term but maintained a negative outlook over the next 12 to 18 months.
“The downgrade reflects our view that performance will remain very challenged and our concern that Blockbuster will not be able to transform its business model in the near term,” S&P said in a statement.
The ratings company reiterated that Blockbuster is facing increased competitive pressures, including rental kiosks, by-mail and streaming, in a rapidly evolving domestic media entertainment industry.
Indeed, Blockbuster shares have plunged since the company revised downward for the second time fiscal year earnings estimates.
Blockbuster reports fourth-quarter (ended Jan. 3) results Feb. 24.