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Coinstar Sells Gaming Unit to Focus on Redbox

9 Sep, 2009 By: Erik Gruenwedel

Coinstar Inc. Sept. 9 said it sold its entertainment services unit to a private Colorado company in order to focus on the burgeoning $1-per-day movie rental kiosk market spearheaded by its Redbox brand.

The sale of the entertainment services unit, which included coin-operated gumball and toy machines, kiddie rides, skill cranes and video games, is expected to result in a pre-tax loss of from $52 million to $57 million and generate a one-time tax benefit of from $82 million to $87 million, according to a regulatory filing.

Bellevue, Wash.-based Coinstar said it expects to record a net gain from the sale of $25 million to $35 million.

“Our core DVD and coin kiosk businesses provide a solid foundation and, with the sale of our entertainment services business, we are better-positioned to maximize the substantial market opportunity in automated retail,” said CEO Paul Davis.

Separately, Coinstar issued a public offering of $175 million of convertible senior notes (bonds) due in 2014. The company said it would use the proceeds to pay down portions of a $400 million revolving line of credit under its senior secured credit facility.

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