BB Liquidating Inc. (BLIAQ)

[fredman]

"Recapitalization of our debt and equity structure to improve liquidity." was stated in the 10-Q in regards to upcoming plans for late Q2 (July).

Keyes went on to say: "We are simultaneously pursuing a recapitalization and are in discussions with bond holders and other parties to improve our liquidity,” and “We remain optimistic about our ability to recapitalize Blockbuster."

In other terms, this translates to:

Blockbuster will undergo a Debt to Equity Swap, sometime in July converting the 300M in 9% senior subordinated notes (bonds) into common equity. While this will improve liquidity (no more debt and interest payments on the 9% Bonds), Common Shareholders will ultimately be wiped out in the process. Bondholders will end up owning 90 - 99% of the company!

While this will stall bankruptcy for a few years until the 630M in 11.75% senior secured notes which are due in 2014 can be dealt with (and possibly "save" Blockbuster long-term as company) the common shareholders are basically being lulled into a false sense of security, and will ultimately see the value of their investment diminish by 90 to 99% overnight. imo.

GLTA

http://www.sec.gov/Archives/edgar/data/1085734/000119312510120521/d10q.htm


STRONG SELL