Blockbuster, the world’s largest video and game rental company, has admitted that its huge debt load has left “substantial doubt” that it will be able to continue as a “going concern.”
Blockbuster is struggling under the weight of $781 million in debt and while the company said last week that its revolving and term loan agreement had been amended to give it $250 million in revolving loan refinancing, on Monday it was revealed that the deal was subject to certain conditions which the company may not be able to meet.
Even if the loan is granted, Blockbuster warned it “may not have sufficient liquidity to finance the ongoing obligations of our business, which raises substantial doubt about our ability to continue as a going concern.”
Launched in 1985, Blockbuster grew to become a behemoth in the video and game rental business. But the company has struggled in recent years against online movie distributors like Netflix, while its own attempt at launching a set-top box for on-demand movies was very poorly received. It doesn’t sound like the company is expecting things to turn around substantially in 2009, either; the company also reiterated its forecast for the 2009 fiscal year which called for lower worldwide same-store revenues compared to the fourth quarter of 2008.