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Big Blue Looking for Cash

26 Oct, 2005 By: Erik Gruenwedel

Blockbuster Inc. today announced it met with bankers seeking to modify provisions of its credit agreement, including the ability to raise additional working capital and reduce debt.

Independent retail analyst Dennis McAlpine with McAlpine Assoc. said Blockbuster could acquire funding either through a stock offering or sale of equity, debt or convertible debt to a private equity firm. He said despite the risky nature of debt purchases, the lure of a higher interest rate in short term and Blockbuster's relatively strong cash flow could be appealing.

“Presumably that debt would not be senior to [outstanding] debt or the banks wouldn't let them do it,” said McAlpine.

The meeting follows Big Blue's recent announcement that third quarter same-store sales would outperform (lose less) than industry projections.

A Blockbuster spokesperson declined to comment.

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