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Blockbuster takeover bid by Dish wins judge's OK
NEW YORK |
NEW YORK (Reuters) - Satellite television company Dish Network Corp can go ahead with its $320 million purchase of Blockbuster Inc, a bankruptcy judge ruled on Thursday.
Judge Burton Lifland's approval gives Dish, led by billionaire Charlie Ergen, control of the one-time video rental leader's 1,700 stores -- a new way to market Dish's services.
Dish put in the winning bid for Blockbuster at an auction earlier this week at U.S. bankruptcy court in Manhattan.
The company beat out activist investor Carl Icahn, South Korea's SK Telecom Co and a group of hedge funds led by Monarch Alternative Capital LP.
Proceeds of the sale will help pay off Blockbuster creditors who are collectively owed more than $1 billion. These creditors include Icahn, other bondholders and movie studios, among others.
Jim Keyes, Blockbuster's chief executive, said after Thursday's court hearing that he was pleased with the sale, especially because Dish has said it plans to keep Blockbuster operating.
Speaking to reporters, Keyes declined to say how many stores will remain open but said he expects Dish to assume a significant number of leases. Blockbuster's DVD rental kiosks, operated by NCR Corp, are also expected to stay in business, he said.
Blockbuster helps broaden Dish's business beyond its satellite service and could help transform the company into a major provider of on-demand video, analysts said. For details click on [ID:nLE7F6164].
MORE THAN 100 OBJECTIONS FILED
Other potential buyers included liquidators that were expected to close Blockbuster had they won the auction.
Blockbuster employs roughly 16,500 people in the United States and 12,800 people elsewhere, Keyes said.
The sale is expected to close on April 25, Dish said in a statement on Thursday. A spokeswoman for Dish did not immediately respond to a phone call seeking further comment.
More than 100 parties had filed objections to the sale with the court, including landlords seeking assurance that Dish would honor and pay sums owed on Blockbuster's leases. Many of these sums remain in dispute.
Blockbuster asked that the objections be dealt with at a later date, and the judge agreed.
"It was not clear until very recently that the successful bidder contemplated an ongoing business model" rather than a liquidation, Lifland said.
He added that Dish's $320 million bid was "fair and reasonable," and in the best interest of Blockbuster creditors and the bankruptcy estate.
Blockbuster filed for bankruptcy in September. It decided to put itself up for sale in February after a plan to reorganize fell apart as losses mounted.
As of February 27, Blockbuster's assets included more than $100 million of receivables and cash and a rental library estimated to be worth $175 million. Other assets include customer lists and rights to stream movies over the Internet.
Lenders including Icahn that had provided Blockbuster a $125 million bankruptcy loan will be paid in full as part of the sale, Stephen Karotkin, a lawyer for Blockbuster, said at the hearing.
Dish's shares fell 37 cents or 1.5 percent to $23.95 on Nasdaq.
The case is in re: Blockbuster Inc, U.S. Bankruptcy Court, Southern District of New York, No 10-14997.
(Reporting by Dena Aubin; additional reporting by Jon Stempel and Tom Hals; editing by John Wallace, Dave Zimmerman and Bernard Orr)
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