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UPDATE 1-Blockbuster urges vote against dissident shareholder

* Investor Gregory Meyer seeking seat on Blockbuster board

* Company calls him unqualified and urges vote against him

LOS ANGELES, June 3 (Reuters) - Blockbuster Inc BBI.N on Thursday urged shareholders to vote against an investor seeking election to the company's board in a hostile proxy contest, as the shareholder and entrepreneur outlined his plans for the company.

A public battle between shareholder Gregory Meyer and executives of the Dallas-based movie rental company has intensified in recent weeks, in advance of a June 24 annual shareholders meeting.

Meyer, who owns 0.44 percent of outstanding Class A shares of Blockbuster, wants to unseat board member Gary Fernandes.

Blockbuster is struggling to avoid bankruptcy as it bleeds customers to mail service Netflix Inc NFLX.O and DVD rental kiosk company Redbox, a unit of Coinstar Inc CSTR.O.

Meyer, 38, in 2001 co-founded DVDXpress, which ran a DVD kiosk company that Coinstar bought in 2007.

He said in a Securities and Exchange Commission filing on Thursday that he submitted to Blockbuster a restructuring plan that would involve the company’s key vendors. The plan is confidential, but Blockbuster has called it inadequate.

Meyer also suggested the company, which has said it lacks liquidity to launch a major marketing campaign, drive traffic to its stores with low-cost viral advertising, and tinker with its pricing.

Blockbuster has seen its share price crater from $29 in 2002 to its closing price on Thursday of 34.5 cents.

“The company has a lot of intrinsic value, but it needs to be unleashed by a competent management team and a board who serves the best interest of the shareholders,” Meyer told Reuters on Thursday.

But Blockbuster in its statement on Thursday told shareholders that electing Meyer would be a “high-risk proposition.”

“If Meyer is such an expert in the home entertainment industry, or even in the vending segment alone, why then is he not at Coinstar today running the Redbox business?” Blockbuster asked in its statement. (Reporting by Alex Dobuzinskis: Editing by Steve Orlofsky)

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