Blockbuster reduces Viacom letters of credit
To boost its liquidity, reduces letters of credit by $50 milNEW YORK -- To further boost its liquidity, Blockbuster has reached an agreement with former parent company Viacom to reduce the face amount of letters of credit that it maintains on behalf of Viacom from $75 million to approximately $25 million.
The move is in line with a reduction in Viacom's exposure to Blockbuster lease obligations, the video rental giant said. The letters cover Viacom's potential liability under Blockbuster store leases that were in place prior to Blockbuster's initial public offering in 1999. Since 2004, many of these leases have been renegotiated or renewed without reliance on Viacom's credit, the firm explained.
Blockbuster chairman and CEO Jim Keyes said the agreement, combined with "strong cash from operations from our core business" and proceeds from the recently announced sale of the firm's store chain in Ireland "will allow us to continue development of the multi-channel offering of Blockbuster."