DALLAS – Movie rental chain Blockbuster Inc. said on Monday it reached a $290 million deal to be bought out of bankruptcy by a group of investors.
The offer from Cobalt Video Holdco LLC is a so-called “stalking horse” bid, which Blockbuster hopes will attract other bidders who will offer more.
The Cobalt group includes funds managed by Monarch Alternative Capital LP, Owl Creek Asset Management LP, Stonehill Capital Management LLC and Värde Partners Inc. They all hold secured Blockbuster debt, so they stand to benefit if someone else buys the company for more than the amount they paid for their Blockbuster debt.
Blockbuster used to be the dominant U.S. movie rental chain. But it lost money for years as customers shifted to Netflix Inc., video on demand and DVD rental kiosks. When it filed for bankruptcy protection in September it was down to 3,000 stores. In December, the chain said it planned to close 182 stores in the next few months.