Blockbuster: Shares Pressured by Financing Issues
Blockbuster (BBI) shares this morning are selling off sharply on concerns about the company’s significant financing needs in the year ahead.
On the retailer’s post-earnings conference call last night, CFO Thomas Casey noted that Blockbuster has a $28 million term loan and a revolving credit facility coming due in August 2009. The company said it had been planning to put another bank credit facility in place early next year, but that “the current state of the banking and overall credit environment certainly muddies the outlook for that event.”
The company said it has an alternative plan to self-fund its business through 2009, which would “temporarily reduce our spending and maximize our cash flow.”