UPDATE 1-Blockbuster shares down 11 pct to just 25 cents

* Blockbuster not in compliance with market cap rule

* Shares fell 9.8 pct on Monday

* Company would like to avoid bankruptcy (Adds analysts' comments, byline)

By Alex Dobuzinskis

LOS ANGELES, March 30 (Reuters) - Blockbuster Inc BBI.N shares fell 11 percent on Tuesday after disclosing it was not in compliance with exchange requirements for minimum market value, compounding the woes of a video-rental chain hovering on the brink of bankruptcy.

The New York Stock Exchange requires listed companies to have a global market capitalization of at least $75 million over a 30-day trading period.

"Their debt load costs $100 million a year in interest expenses. They simply have to get that down, because without that they're pretty much break even," said Charles Wolf, an analyst with Needham & Co.

"They would prefer not to go into Chapter 11; they may have no choice."

Blockbuster shares closed down 9.8 percent on Monday after the company said it was not in compliance with the market cap rule. The stock fell as low as 24.25 cents on Tuesday.

A Blockbuster representative could not be reached for comment.

The shares peaked at just over $29 in 2002, but since then Blockbuster has faced tough competition from movie rental companies Netflix Inc (NFLX.O) and Coinstar Inc-owned (CSTR.O) Redbox. Shares in Netflix rose 1 percent to $74.69.

Hollywood studios are trying to keep Blockbuster alive, Wolf said. Time Warner Inc's (TWX.N) Warner Bros is selling the company its DVDs 28 days before Netflix or Redbox gets them, and Blockbuster highlights that advantage in advertisements.

Blockbuster plans to ask investors at its annual shareholder meeting on May 26 to decide on a proposal for a reverse stock split.

The company, which faces a crushing debt load of nearly $1 billion, said earlier this month that it might need to file for bankruptcy protection. [ID:nNN1611187] (Reporting by Alex Dobuzinskis: Editing by Richard Chang)