Icahn Dumps Blockbuster In March 13D Filing, $BBI Financial Trends and Senior Subordinated Notes At 20.25

Remember Icahn was buying Blockbuster in 2005. I thought there was some kind of 2004 Kmart real estate play going on but turns out they mostly lease space.  Six months ago they announced they were closing 960 stores or 5.5 million square feet of space through 2010 (Costar). It looks like the no late fee and quasi-netflix plan didn't hit the ball out of the park.  Maybe flooding the market with $1 dollar kiosks will save the day or perhaps sell overseas assets. Numbers speak louder than words so check out Blockbuster financial trend analysis over 10 quarters (revenue growth %, revenue, net income, net margin % and shareholder's equity, interest coverage and Netflix revenue revenue trend) courtesy of Wikinvest.  I also provided charts of BBI stock, $300 million subordinated notes and Icahn's liquidations.  First watch this video.

Blockbuster ($BBI) Revenue Growth Percentage (over 10 quarters).

Explore more BBI Data at Wikinvest

Blockbuster ($BBI) Revenue, Net Income, Net Margin % (over 10 quarters).

Explore more BBI Data at Wikinvest

Interest Coverage ratio over 10 quarters. They had a $43 million interest payment on senior secured notes today.

Explore more BBI Data at Wikinvest

Total shareholder's equity was swimming in red at the end of Q4-2009 (-314.3 Million).

Explore more BBI Data at Wikinvest

Look at Netflix (NFLX) revenue trend over 10 quarters.  Speaking of Netflix, Netflix Instant Watch coming to Apple iPad (LATimesBlogs).

Explore more NFLX Data at Wikinvest

On March 16 Blockbuster said "continuing losses and backbreaking debt raise "substantial doubt" about its ability to remain solvent." (USA Today). We'll see what happens. The stock is trading at 0.25 and look how BBI's senior subordinated notes got chopped from 60 to 20 in January (chart source, finra.org). Fitch just downgraded BBI to C from CCC.

BBI Stock at 0.25 (StockCharts.com)

BBI Senior Subordinated Notes which expire 9/1/2012 (BBI.GB, 20.25, 105.91%)

"The downgrade of Blockbuster's ratings follows the company's 10-K filing which outlined its initiative to exchange all or a part of its senior subordinated notes for class A common stock. The company may also seek certain modifications to the senior secured notes. Assuming that an agreement can be reached with the holders of the notes in terms of an exchange, an exchange will occur during the latter part of the second quarter or early part of the third quarter of this year. Blockbuster also stated that it is possible that a successful exchange will require the company to make a pre-packaged, pre-arranged or other type of filing for protection under Chapter 11 of the U.S. Bankruptcy Code. Fitch believes the transaction as contemplated constitutes a coercive debt exchange (CDE) which is considered a default as outlined in Fitch's global criteria report, 'Coercive Debt Exchange Criteria', published on March 3, 2009. In the event that a CDE is successful, Fitch will downgrade the IDR of Blockbuster to 'RD' from 'C'. Following the downgrade, Fitch will review the company's credit profile and its modified capital structure and assign a new IDR accordingly. However, if the CDE is unsuccessful, Fitch views the probability of a default or bankruptcy as very high. In such a situation, the IDR will likely remain at 'C' until a default occurs or until the company's financial performance and credit profile improve sufficiently to warrant an upgrade." (BusinessWire/BNET)

Below is a visual of Icahn's funds pulling the trigger. He still owns some shares, "5.14% of the Issuer's outstanding Class A Shares [through a preferred stock conversion to A] and approximately 6.05% of the Issuer's outstanding Class B Shares" 13D filing.

Icahn funds dumping some BBI from 0.24-0.30

UPDATE:Blockbuster: No Update On Plan To Sell Operations Abroad (WSJ)
Blockbuster DVD chain warns it faces bankruptcy (Guardian)
Blockbuster Falls Below NYSE Listing Requirements (Forbes)
Blockbuster Closing Up to 960 Stores Through 2010 (CoStar)
This is interesting... US CREDIT-Loan CDS changes could enhance liquidity (Reuters)

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