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Hollywood Board Stays Neutral on Blockbuster Debt Bid

25 Feb, 2005 By: Erik Gruenwedel

Hollywood Entertainment's board of directors and the independent special committee convened to scrutinize Blockbuster's hostile takeover advances today offered no official opinion regarding Big Blue's offer earlier this month to purchase a $225 million principal amount of Hollywood's senior subordinated notes (debt financing) due in 2011.

The board cited fiduciary duties to Hollywood shareholders—not debt holders—for its neutral stance.

That said, the board reiterated concerns regarding Blockbuster's debt purchase, including conditions that would disallow debt holders to reverse their decision, and also that accepting the debt purchase offer would be a defacto affirmation of Big Blue's Feb. 4 unsolicited offer for Hollywood's common stock.

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