Blockbuster shares plummet on bankruptcy fears
Rental chain denies reports of impending restructuring after rumors spark 75 percent drop in stock price.
Blockbuster looks less like its namesake and more like a big-budget flop these days as the movie and game rental chain is trying to manage $328 million in debt as it attempts to stave off encroaching competitors like Netflix and Gamefly. This week got off to a particularly trying start for the chain. Reports surfaced Tuesday that it had hired a law firm to assist with a possible bankruptcy filing.
As Reuters reports, Blockbuster shares lost more than 75 percent of their value Tuesday before trading was suspended. The rental chain responded to the plummeting share price by confirming that it had hired the firm to help raise capital and refinance debt, not for bankruptcy proceedings. Despite that, Reuters cited "a source familiar with the matter" as saying the company is exploring restructuring options that include a potential bankruptcy.
Blockbuster is set to update investors on its efforts to refinance March 19, during its quarterly earnings call. Shares in the company closed Monday at $0.65 and were dragged down to a Tuesday close of just $0.12. The rental chain rebounded somewhat today, closing at $0.17 a share.
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