Face amount of letters of credit reduced
Blockbuster and former parent Viacom have agreed to amend terms of their 2004 split to reduce the face amount of certain letters of credit from $150 million to $75 million.Move gives the vidtailer an additional $75 million of liquidity under its current borrowing structure. “This will provide us with additional financial flexibility as we continue to reposition Blockbuster into a multi-channel provider of entertainment,” said chief exec Jim Keyes. The letters of credit are maintained by Blockbuster for Viacom’s benefit to cover Viacom’s potential liability under existing Blockbuster store leases. Since 2004, some of those leases have been renegotiated or renewed without Viacom’s guaranty. That made it possible to reduce the face amount of the credit letters.