An auditor for Blockbuster is uncertain whether the rental giant can last for the foreseeable future, according to an SEC filing.
The business jargon states that Blockbuster may not be able to continue "as a going concern" -- in other words, without the threat of being liquidated.
Blockbuster is relying on an amended $250 million revolving term and loan agreement with J.P. Morgan and other lenders that matures on September 30. Certain conditions must be met in order to get that credit, and Blockbuster is not sure that it can do so.
"Our future viability is dependent on our ability to execute these plans successfully or otherwise address our liquidity shortfall," the filing says. "If we fail to do so for any reason, we would not have adequate liquidity to fund our operations, would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code."
Last month, Blockbuster had warned that its auditor might raise doubt over the company's ability to survive, but in this filing, Blockbuster says even the amended credit agreement might not be enough. As of early January, the company was carrying $780.9 million in debt. In the filing, the company points a finger at the economic downturn (and, previously, bad movies), saying lower than expected revenues make it even harder to fulfill debt services.
Basically, the demise of a once-dominent rental chain could be closer than you think.
I know there are readers here that have ill feelings about Blockbuster -- and I've been avoiding the chain myself lately -- but movie watchers will suffer without the company's presence. Netflix just upped its Blu-ray fees. It would be a shame to lose an alternative.
