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Blockbuster Inc. Message Board

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  • are_you_ready_skidaddy are_you_ready_skidaddy Nov 16, 2005 12:27 PM Flag

    How this new offering works?

    The offering gives prefered shareholders more status to any assets of BBI under bankruptcy than common shareholders but less than creditors of BBI. So if you want to asure an ownership in BBI that will last buy BBI debt. Otherwise you run the risk of being wiped out in the bankrupcy if you own the prefered AND you be certainly wiped out if you own the common.

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    • netflix_got_blockbusted netflix_got_blockbusted Nov 16, 2005 12:38 PM Flag

      Ultimately, the people who put up $150MM have far more access into BBI's strategy and finances than we do. And if these people had any fear of BK, they certainly wouldn't put risk their money for 7%.

      While people on the messageboards love to speculate about BK, it's just not a reality.

      At this point, BBI has far better credit terms and much more operating flexibility. Come this May, it's highly likely that Icahn will take over BBI. At that point, you'll likely see BB Online spun off and the stores run purely for cash. Icahn paid $9 for his initial 10% stake, and he obviously continues to see significant potential in BBI's cash generation potential.

    • On November 15, 2005, Blockbuster completed the private offering of the Shares at an aggregate offering price of $150,000,000. The aggregate discounts and commissions to the Initial Purchasers was $4,875,000. A copy of the press release announcing the completion of the offering is attached hereto as Exhibit
      99.1. The Initial Purchasers have an over-allotment option to purchase an additional 22,500 Shares. Blockbuster intends to use the net proceeds from the offering for the repayment of a portion of the outstanding borrowings under its revolving credit facility and for general corporate purposes, which may include working capital and capital expenditures.

      • 1 Reply to orliskas
      • Each Share is convertible at the option of the holder at a conversion price of $5.15 per Share, subject to adjustment, which represents an initial conversion rate of approximately 194.1748 shares of Blockbuster's class A common stock, representing a conversion premium of approximately 22 1/2% over Blockbuster's class A common stock closing price on November 8, 2005 of $4.20 per share. On or after November 20, 2010, Blockbuster may cause the conversion rights to expire if the closing price of the shares of class A common stock exceeds 130% of the conversion price for a specified period. Upon the occurrence of a fundamental change, Blockbuster will, under certain conditions, increase the conversion rate for any Shares converted in connection with such fundamental change.


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