Credit rating firm Egan-Jones Group today cut its view on Blockbuster (BBI) to D from CC, a move the firm says reflects their view that the ultimate results for the company is likely to be a “defacto default” where the unsecured creditors receive less than 100 cents on the dollar.
The firm says that they think BBI needs to reduce its debt position by at least 50% to be on sound financial footing, and adds that “this would leave the unsecured bondholders with a marginal recovery.”
Egan-Jones thinks the company also needs new capital in order to invest in its mail DVD rental and online video streaming services.
If the firm is right, and bondholders are not made whole, the prospects for the long-term value of equity would be even worse, and the stock would likely to go to zero.
BBI today is down 1.5 cents, or 5.3%, to 27 cents.
No comments:
Post a Comment