* Blockbuster exploring strategic alternatives
* Pursuing possible exchange of senior subordinated notes
* Strategies may require it to seek Chapter 11
* Auditors raise going concern doubts.
LOS ANGELES, March 16 (Reuters) - Embattled video rental chain Blockbuster Inc BBI.N said on Tuesday it was continuing to explore alternatives to strengthen its balance sheet, which may include filing for bankruptcy protection.
In a filing with the Securities and Exchange Commission, the company said it was pursuing an initiative involving an exchange of all or part of its senior subordinated notes for Class A common stock, which could require it to file for protection under the U.S. Bankruptcy Code.
The company also said its auditors have raised doubts about its ability to operate as a going concern. (Reporting by Susan Zeidler; editing by Andre Grenon)