Blockbuster Reduces Letters of Credit Agreement With Viacom by $50 Million
Letters of Credit Reduction Significantly Improves Company Liquidity
DALLAS // PRNewswire-FirstCall // -- As part of its ongoing liquidity improvement initiatives, Blockbuster Inc. (NYSE: BBI) (NYSE: BBI.B) today announced that it has reduced the face amount of certain letters of credit it maintains on behalf of its former parent company, Viacom Inc., from $75 million to approximately $25 million, paralleling a reduction in Viacom's exposure to Blockbuster lease obligations.
The reduction of the letters of credit follows Blockbuster's announcement on Aug. 28 that it sold its 186-store XTRA-VISION® chain in Ireland for cash proceeds of up to $45 million.
"We are pleased to have reached this agreement with Viacom, which delivers on our promise to improve liquidity through a number of initiatives," said Jim Keyes, Blockbuster Chairman and CEO. "This agreement, combined with strong cash from operations from our core business and proceeds from the sale of our Xtra-vision chain, will allow us to continue development of the multi-channel offering of Blockbuster."
The letters of credit are maintained by Blockbuster for Viacom's benefit to cover Viacom's potential liability under existing BLOCKBUSTER® store leases in place prior to Blockbuster's 1999 initial public offering. Since 2004, many of those leases have been renegotiated or renewed without reliance on Viacom's credit, thereby further facilitating the reduction in the face amount of the letters of credit.
Additional details on the agreements with Viacom that facilitate the reduction in the face amount of the letters of credit are outlined in a Form 8-K to be filed by Blockbuster with the U.S. Securities and Exchange Commission.
Blockbuster Inc. is a leading global provider of in-home movies and game entertainment with more than 7,100 stores throughout the Americas, Europe, Asia and Australia.
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SOURCE Blockbuster Inc.