Blockbuster shares rise on liquidity increase
Elimination of letters of credit frees up cashNEW YORK -- Shares of Blockbuster more than 9% at times Thursday after the video rental giant said it has eliminated letters of credit related to its former parent company Viacom, boosting its financial flexibility.
The two companies parted ways in 2004. The letters of credit covered potential liabilities related to store leases. Their elimination frees up cash that increases the company's liquidity.
Several months ago, Viacom had reduced the face value of the letters from $75 million to $24 million.
Now, the face amounts of the letters were reduced to zero "as a result of the company's having satisfied or eliminated all of the obligations and contingencies underlying them," Blockbuster said in a regulatory filing on Thursday.