Troubled US parent set to sell UK Blockbuster

Published on Sunday 14 March 2010 19:39

FILM rental giant Blockbuster is believed to have put its European business up for sale against the backcloth of rising concern over the financial health of its parent.

America's Blockbuster Inc has more than $1 billion (660 million) of debts, which it wants to partly address by selling the European division.

This includes 650 stores and more than 5,000 staff in the UK. The company has appointed Winchester Capital, a US finance house, to seek potential buyers.

Blockbuster, which also has stores in Denmark, Ireland and Italy, is thought to value the European business at about 50m.

The parent group was set up in 1985, but has suffered debt problems since being demerged from US media conglomerate Viacom more than a decade ago.

It has increasingly moved into the online market for home entertainment and away from its traditional shops.

Last month Blockbuster revealed worldwide sales had fallen $1bn to $4bn in 2009, while losses leapt 50 per cent to $560m.

The stock market value of Blockbuster on Wall Street has plummeted during its troubles, with the stock now worth just 41 cents. It was once valued at $28.

Analysts say the company is also looking at a possible change to its capital structure, including a potential debt-for-equity swap with its banks. Its auditor recently raised doubts over its ability to continue as a going concern.