Blockbuster agrees to sale for $290 million, seeks more bidders
New York City — Blockbuster said on Monday that it reached a $290 million deal to be bought out of bankruptcy by a group of investors.
The offer by a group of hedge firms comprised of Monarch Alternative Capital, Owl Creek Asset Management, Stonehill Capital Management and Värde Partners — is a so-called “stalking horse” bid. It sets a base price that Blockbuster hopes will attract other potential suitors who will offer more.
Together, the creditor group, which calls itself Cobalt Video, owns more than 50% of Blockbuster’s senior secured notes, and each member is part of the company’s creditor steering committee, according to The New York Times.
As part of the purchase agreement with Cobalt, Blockbuster must begin closing down 609 stores, according to a court filing. Cobalt has also reserved the right under certain circumstances to convert Blockbuster’s bankruptcy case into a Chapter 7 liquidation.
“By initiating a sale process at this time, we intend to accelerate our Chapter 11 proceedings and move the company forward,” Jim Keyes, Blockbuster’s chairman and CEO, said in a statement. “An auction will allow the company to invite competing bids from both strategic and financial investors.”
Blockbuster must still seek permission from Judge Burton R. Lifland, the Manhattan federal judge overseeing the company’s bankruptcy case, to run the sales process. If the judge approves, potential bidders would have 30 days to submit their offers, followed by a one-week auction.
Major moves at Best Buy designed to drive growth
Minneapolis — Best Buy is looking to reinvent its future and late Monday announced a series of moves designed to enhance the company’s growth prospects and profitability.
On the domestic front, Best Buy said it plans to double the number of Best Buy Mobile stores by the end of the current fiscal year by opening 150 new freestanding stores to give it a total of 325 units. The company said the Mobile stores fit with its “connected world” strategy and have rapidly grown wireless connection revenue and profits in the United States. Conversely, expansion of Best Buy’s large format stores will slow considerably as only six to eight new units are planned for the current fiscal year. That equate to 1% square footage growth, which is well below the 5% rate seen during the past five years.
A series of international moves were also announced including expansion of Best Buy branded large format stores in Canada, United Kingdom and Mexico. While a total of 18 big Best Buy stores are planned for those markets, the company said it would close its nine Best Buy branded stores in China to increase the emphasis on its Five Star brand stores. Between 40 and 50 Five Star stores are planned that should give Best Buy a total of 210 Five Star stores by year end.
The company also said it would cease operations in the test market of Turkey and undertake a restructuring of its supply chain operations.
“We’re pleased to continue our investments in the Best Buy Mobile and Five Star business models, which are profitable and have significant growth opportunities,” said Brian Dunn, CEO of Best Buy. “The actions we are taking are consistent with our strategy of driving businesses that have earned the right to additional capital while curtailing activities that we believe will not meet our return on investment thresholds.”
The moves will result in charges during fiscal 2011 and 2012 totaling between $225 million to $245 million, with a 33 cent to 36 cent impact on earnings per share in fiscal 2011. By the following fiscal year, Best Buy said it expects to realize annual savings between $60 million and $70 million.
Aldi takes a bite out of the Big Apple
NEW YORK — Discount grocer Aldi has opened its first-ever New York City-area store in the borough of Queens.
The store, which is located in Rego Park, marks the first of three grocery stores the company plans to open in New York, including new locations in the Bronx and Bay Shore, Long Island.
Aldi, which offers a limited assortment of items, said it will bring its standard floor plan to Queens, which includes wider-than-typical 8-ft. aisles.
"Our growth is a testament to our popularity with consumers and the loyalty of our long-time customers," said Bruce Persohn, VP of Aldi’s South Windsor division in Connecticut.