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Blockbuster Tidies House Prior to Shareholder Meeting

24 Apr, 2007 By: Erik Gruenwedel

Heading into its first quarter 2007 results and annual shareholder meeting May 2 and 9, respectively, Blockbuster Inc. has been busy amending credit agreements and executive positions.

Dallas-based Big Blue April 24 announced in a regulatory filing that it had amended a 2004 credit agreement that among other provisions, allows the No. 1 U.S. movie rental chain to sell and/or transfer assets with a cumulative fair market value up to $150 million without lender approval.

Previously, Blockbuster was limited to transfer assets of $100 million, in addition to a $10 million limit on reinvestment back into business and a $25 million ceiling on store sales and swaps without lender approval.

Under terms of the amendment, Blockbuster must contribute 100% of any net proceeds from an asset sale to its lender agent, JP Morgan Chase Bank. At the end of 2006, the company reportedly had debt exceeding $975 million.

In addition, Blockbuster March 29 removed board member Strauss Zelnick from the audit committee after he was appointed chairman of board for video game publisher Take-Two Interactive Software Inc., creator of the “Grand Theft Auto” franchise.

From Jan. 1, 2006 to April 1, 2007, Blockbuster paid Take-Two about $30 million in various commercial deals, according to a regulatory filing.

Zelnick, who will be paid a $62,500 monthly management fee by Take-Two, among other compensation, remains on the Blockbuster board, according to a company spokesperson.

Separately, Blockbuster agreed to pay former EVP and president, international, Christopher Wyatt, severance of more than $1 million when his employment contract expires June 30.

Wyatt, who was fired last July when Blockbuster streamlined international operations, had been slated to receive his $600,000+ salary and bonus compensation for up to 18 months after the termination date.

As previously announced, Blockbuster also named Nick Shepherd to the vacant position of EVP and COO. The 12-year executive reports to chairman and CEO John Antioco, who announced he is leaving the company at the end of the year.

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