New York City Blockbuster won a key one-month reprieve on debt payments, allowing it to stay a couple of steps ahead of bankruptcy. However, the embattled chain was forced to begin the process of delisting from the New York Stock Exchange after a reverse stock split failed to get a majority of votes in favor.
Blockbuster on Thursday said it had struck a forbearance agreement with creditors holding about 70% of its 11.75% senior secured notes due 2014. A payment was due July 1.
Those creditors, which hold debt amounting collectively to about $440 million, agreed to hold off from exercising "remedies" until Aug. 13 on the missed payments. However, some analysts questioned the extension would matter in the long run.
With regards to the delisting, Blockbuster had proposed the reverse split to help keep in compliance with NYSE listing standards, since its shares have traded below $1 a share for too long.
Also on Thursday, Blockbuster said its board has agreed to indefinitely extend CEO Jim Keyes' contract, which had been due to expire this week.
“The agreement provides us with additional time and flexibility as we continue to take steps to implement a more appropriate capital structure," Keyes said in a statement. "While we are making progress in our recapitalization efforts and are in the process of negotiating term sheets with these parties, these are complex multi-party negotiations and take time."
Blockbuster has been trying to stave off bankruptcy for the past year. It has been closing stores and postponing debt payments to preserve capital.