Dallas Blockbuster said Monday the risk that it may not complete financing deals raises "substantial doubt" about its ability to continue as a going concern. The chain disclosed the warning Monday in a filing with the Securities and Exchange Commission.
On Friday, Blockbuster said it had amended its revolving and term loan agreement, giving it a $250 million revolving loan refinancing that matures on Sept. 30, 2010. Lenders including JPMorgan also agreed to waive any default that could result if auditors attached a "going concern" classification. The news appeared to give the chain, which has struggled amid the rising popularity of such DVD-by-mail services as Netflix, breathing room in its ongoing struggle.
But on Monday, the company disclosed its lenders' obligation to fund the $250 million credit facility is subject to meeting certain conditions, and there can be no assurances that these conditions will be met.
Even if the loan is funded, the company said it "may not have sufficient liquidity to finance the ongoing obligations of our business, which raises substantial doubt about our ability to continue as a going concern."
Blockbuster said it believes that it will be in a position to close the amended credit facility by around May 11, though "there can be no assurance regarding these matters."