The largest chain of movie and video game rental stores in the world appears to be teetering on the brink of collapse, according to a new filing with the SEC.
The company's current lifeblood is a $250 million line of credit, but that line of credit has some newly amended conditions, and the company isn't sure it can meet them.
"While we believe that all such conditions will be met and that we will be in a position to close on the amended credit facility on or about May 11, 2009, there can be no assurance regarding these matters," the company wrote in an April 6 filing with the Securities and Exchange Commission.
"We believe that cash on hand, cash from operations and available borrowings under the amended credit facility (assuming that we close on such facility) will be sufficient to fund our anticipated cash requirements for working capital purposes and normal capital expenditures, and that we will remain in compliance with the financial covenants contained in our amended debt agreements, for at least the next 12 months. However, there can be no assurance regarding these matters given the current state of the global economy, which has negatively impacted our ability to accurately forecast our results of operations and cash position, and which may result in deterioration of our revenues beyond what we anticipate."
Blockbuster has faced stiff competition in recent years, especially from online rival Netflix and the booming $1-per-night redbox service. The company has responded with monthly rental programs of its own, and is experimenting with on-demand technology and in-store kiosks.
The company reported a net loss of $374 million for 2008. Blockbuster stock closed at 88 cents per share on Monday, down from a 52-week high of $3.55.
