Blockbuster faces possible ‘going concern’ note from auditor
Blockbuster delayed the filing of its annual 10-K report with the Securities and Exchange Commission as it seeks ways to refinance its debt to replace its current credit agreement that expires in August, and with it its access to $300 million in credit.
“The substantial time and resources dedicated to the refinancing negotiations” by Blockbuster’s management and financial staff has caused the company to be unable to file its 10-K “without unreasonable effort or expense.”
What’s worse, though, is that if the company is unable to finish refinancing its existing debt, or if “uncertainties” about its “liquidity position” remain “unresolved” by the time the company files its 10-K, management expects that the report will include “an explanatory paragraph indicating that substantial doubt exists with respect to (Blockbuster’s) ability to continue as a going concern.”
As part of the Form 12b-25 the company filed Monday notify the SEC it would be late in its required filing, the company also said that it expects to report a “significant change” in its results than it has previously published: namely a “$435.0 million non-cash impairment charge to its goodwill and other long-lived assets.” The impairment charge is the main reason for the company’s year-over-year increase in net loss, which was $374.1 million for fiscal 2008 as compared to $73.8 million for fiscal 2007.
