It is often said that turnarounds rarely turn around and earlier today it looked like Blockbuster (BBI) was going to be no exception. The stock, which had already been battered over the course of the last year, declined sharply today to 22 cents before trading was halted on news that the company had hired restructuring specialists Kirkland & Ellis to explore bankruptcy. According to this Forbes article titled Blockbuster Not Bust , the reports of Blockbuster’s demise were a little premature and the company refuted claimed about filing for Chapter 11 bankruptcy. With over $854 million in debt on its balance sheet and only $35 million remaining on a $400 million line of credit, the company was hoping that Kirkland & Ellis would help it refinance some of its loans. The stock rebounded nearly 60% or 13 cents to 35 cents in after hour trading.
The picture for Blockbuster has been bleak for some time now but for a few brief moments it looked like new management at the company might be able to turn the company around. The company posted a 11% improvement in same store sales numbers, cut back on aggressive marketing for its online subscription service, acquired the movie download service Movielink for a fraction of the money spent by the large studios developing it, closed down unprofitable stores, inked a deal with Live Nation to sell concert tickets and even managed to post a profit earlier this fiscal year after several years of red ink.