Icahn, others make bids for Blockbuster

AP News
Posted: Apr 04, 2011 6:57 PM
Icahn, others make bids for Blockbuster

Blockbuster Inc. mulled bids from Carl Icahn and others in an auction process that began Monday in New York that will decide the fate of the troubled video-rental chain.

Potential bidders, lenders and Blockbuster representatives met in several rooms at the U.S. Bankruptcy Court in the Southern District of New York on Monday. A sign on one room said it was reserved for Carl Icahn's Icahn Acquisition Corp. The billionaire investor did not return a call seeking comment.

The Wall Street Journal reported liquidation firms Gordon Brothers Group and Hilco Merchant Resources submitted a joint bid for some of Blockbuster's assets including its DVDs. Gordon Brothers could not be reached. Hilco declined to comment.

Blockbuster spokesman Michael Freitag would not confirm the bidders, saying the process was confidential. The courthouse action wrapped up by 6 p.m. Monday and was expected to resume Tuesday morning.

Blockbuster and its assets, including its name, kiosks and movie-download service, might be purchased together or separately. The stores and their DVDs could be liquidated, while others keep the name or the kiosk video-rental business, for example.

When Blockbuster, based in Dallas, filed for bankruptcy protection, it was down to 3,000 stores, less than a third of the peak of 9,100 in 2004. There are about 2,400 currently open with plans to close about 700 more by mid-April.

The auction process is expected to be complete before a sale approval hearing scheduled for Thursday.

Icahn was part of the group of debtholders that provided Blockbuster financing to operate while in bankruptcy in September.

Everyone in that group except for Icahn made the opening bid, known as a "stalking horse" bid, in February to buy Blockbuster for $290 million. That group, called Cobalt Video Holdco LLC, includes investment funds managed by Monarch Alternative Capital LP, Owl Creek Asset Management LP, Stonehill Capital Management LLC and Varde Partners Inc.

Other reports have suggested that bidders may include The Dish Network and SK Telecom, according to unconfirmed reports.

Blockbuster used to dominate the U.S. movie rental business. But it lost money for years as that business declined because customers shifted to Netflix Inc., video on demand and DVD rental kiosks.