Blockbuster weighing options to fund Circuit City bid: report

NEW YORK (Reuters) - Blockbuster Inc (BBI.N) is studying options like using Circuit City's CC.N own balance sheet to fund its buyout offer, even as the electronics retailer is asking Blockbuster to prove it can handle an all-cash bid, the Wall Street Journal reported on Monday citing people familiar with the matter.

Blockbuster is also considering using its existing debt facility, possible asset sales and cost savings for the deal, the report said citing the same sources.

Last week, the Dallas-based video rental company offered up to $1.3 billion to buy Circuit City. But the offer has drawn doubts from Wall Street, investors and Circuit City itself over how Blockbuster will fund the bid.

While investors fear that Blockbuster may need to raise new debt or renegotiate its current debt to finance the offer, Blockbuster is hopeful that it has alternative funds to sidestep that possibility, the Journal said, citing people familiar with the situation.

Still, Blockbuster will not go ahead with the offer if it does not like what it sees in Circuit City's financial books, the Journal said in a separate report, citing an interview with Blockbuster Chief Executive Jim Keyes.

Circuit City has not allowed Blockbuster to see its books.

Representatives for both companies were not immediately available for comments.

(Reporting by Aarthi Sivaraman; Editing by Richard Hubbard)