More bad news for Blockbuster: the DVD rental firm announced yesterday that it will lose its place on the New York Stock Exchange next Wednesday, after it failed to get enough shareholder votes on proposals designed to help it comply with NYSE requirements.
The suspension and delisting of Blockbuster shares comes after a failed attempt to get shareholders to agree to a reverse stock split and a combination of its Class A and Class B shares to comply with NYSE requirements. Those actions came before stockholders at its annual meeting last week, but the company failed to get a majority of shareholders to vote in favor the proposals, in part due to low voter turnout. According to Blockbuster, 49 percent of shares voted in favor of combining the stock classes and only 43 percent were cast in favor of the reverse stock split. That put Blockbuster afoul of NYSE requirements, which call for listed companies to have a share price of above $1 and a market cap of above $75 million.
The only good news that the company announced was that its debt-holders agreed to give the company a six week-extension to make good on a $42.4 million interest and principal payment against $630 million in senior secured debt that would have required Blockbuster to hand over virtually all its cash on hand. The reprieve lasts through August 13, 2010.
Blockbuster has been frantically trying to stay alive, shuttering stores and trying to conserve cash while competitors like Netflix and Redbox continue to steal market share. But despite deals with studios like Warner Bros., Sony Pictures and 20th Century Fox that give it a 28-day advantage over Netflix and Redbox on renting new release titles to its customers, the company has warned that bankruptcy is a possibility if it can’t turn around its business — and quickly.
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