Lots of Suspense at Blockbuster's Annual Meeting -- But No Plot Twist on Financing
The Blockbuster (BBI) annual meeting offered suspense, drama, a dash of hope...and twists befitting one of its best-selling movie rentals. Starting 45 minutes late while auditors puzzled over whether there was a quorum present, the meeting offered a surprise ending to the quest of dissident shareholder Gregory Meyer to oust a board member and get himself a director's seat.
On the finance side, the suspense continues building toward July 1, when a big debt payment comes due. Despite much foreshadowing that a cash infusion and/or debtor-in-possession financing for a prepackaged bankruptcy was in the offing -- including a month-long delay of the meeting date to buy more negotiating time -- managers had nothing to announce. Barely avoiding the humiliation of seeing one of their members likely voted out, managers cut a last-minute deal to expand the board to add Meyer. (Wouldn't you just kill to be in that first board meeting where Meyer joins them? Literally up until the day before the meeting, the company was aggressively attacking Meyer's credibility, issuing a report just days before urging investors to vote against Meyer.)
We'll see if the board will take any advice from Meyer, whose background selling his DVD-rental company to Coinstar's (CSTR) Redbox could be useful, if anyone will listen. Meyer pronounced himself ready to roll up his sleeves -- he owns the biggest stake of any of the directors at 650,000 company shares. But turning this big, creaking ship fast enough to save the company may be as tough as getting the Titanic to avoid that iceberg.
The company injected a little tension into the meeting by getting approval for a possible reverse stock split, a classic method used by companies desperate to boost their share price above the $1 cutoff for staying listed as a public company. The NYSE has granted Blockbuster a year to get its stock price -- below $1 since October -- back above water. It may not be possible without this type of drastic measure, which investors hate as they end up with fewer shares.
After the meeting, Keyes provided a glimmer of hope for the company's future as he demonstrated a new kiosk that's coming soon to Blockbuster stores. Built by NCR (NCR), the kiosk allows customers to download movies directly to portable media players such as Microsoft's (MSFT) Zune. (Update: Whoops, that was from a previous Blockbuster annual meeting.)
Finally, following that old showbiz convention of leaving them wanting more, Keyes refused to take questions in the meeting, citing the time delay caused by counting votes. Blockbuster heard and responded to the wishes of their biggest shareholders in the meeting, but apparently wasn't willing to make any time for the little guys.
Photo via Flickr user TheeErin Related:
- Blockbuster CEO Remains In Denial as the Annual Meeting Looms...
- Blockbuster's Desperate, Last-Minute Money Hunt Didn't Have to Happen
- As Blockbuster's Woes Mount, One Investor Has a Plan -- And It Just Might Work
- Blockbuster Scrambles for Cash and Stalls for Time, But Neither Will Save It
- Blockbuster Nears Bankruptcy -- And That Might Be a Good Thing, Too
- How Blockbuster Could Find a Happy Ending