Blockbuster developments: CEO says chain will keep operating; advisory firm backs activist bid for board seat
New York City Blockbuster CEO Jim Keyes confirmed Tuesday that the company is negotiating options that would keep the company operating in or out of bankruptcy protection, the Associated Press reported. In other developments, a prominent proxy advisory firm recommended that Blockbuster appoint an activist investor who has been attempting to get on the retailer’s board, representing a setback for Blockbuster’s fight to reject the bid.
In an interview with The Associated Press, CEO Jim Keyes expressed confidence that Blockbuster can restructure its more than $900 million of debt outside of court. He pointed out that the company has been able to raise capital twice over the past 18 months.
Last week, The Wall Street Journal reported that Blockbuster is trying to line up $150 million from bond holders to help pay for operations in case of a Chapter 11 filing. Keyes wouldn't comment directly on that figure and cautioned against concluding that any final decisions have been made on restructuring the company's debt.
Keyes noted that Blockbuster has a chance to catch up with such rivals as Netflix and Redbox now that it has developed its own services for delivering movies over the Web and through vending machines. He also said the chain has an opportunity to win customers in international markets where it has already established its brand with store locations. By comparison, Netflix’s services are not yet available abroad.
On Tuesday, RiskMetrics Group backed investor Gregory S. Meyer’s bid to join Blockbuster’s board. Blockbuster has been urging shareholders to reject the bid; shareholders will make their decision at the company's annual board meeting June 24.
In a statement, RiskMetrics said Meyer "would be aligned with shareholders, has demonstrated that change is warranted, has relevant skill sets and industry knowledge, and, therefore, is likely to add value to board deliberations."
Meyer founded a DVD rental kiosk business in 2001 called DVDXpress and later sold it to Redbox operator Coinstar. The business has emerged as a major competitor for Blockbuster's traditional stores.
Meyer has argued that Blockbuster doesn't have a practical strategy for competing with Redbox or Netflix, which have eaten away at its business. He is trying to replace director Gary J. Fernandes, chairman of FLF Investments, a real estate investment firm.
Blockbuster argues that Meyer's business experience does not make him a good fit for the board. It has pointed to another independent opinion from the proxy firm Glass, Lewis & Co., which recommended shareholders for Blockbuster's existing directors.