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.
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.