Blockbuster shares jump after rental chain sells Irish retailer Xtra-vision

Friday, August 28, 2009

Blockbuster shares jump after Irish retailer sale

NEW YORK — Shares of Blockbuster Inc. jumped Friday after the chain said it sold Irish entertainment retailer Xtra-vision Ltd. in a deal valued at up to $45 million.

The movie and video game rental chain, which bought Xtra-vision in 1997, said it plans to use most of the proceeds for boost its liquidity.

At least one analyst said Friday that the sale should significantly help the company do that.

“(Blockbuster) has shown substantial progress in generating the required cash flows necessary to meet debt obligations totaling $415 million by the end of 2010,” Janney Montgomery Scott analyst Tony Wible said in a note to clients. “With $100 million in potential international asset sales, we believe the company is on track to emerge from the credit crisis.”

In the near-term, he thinks that a promising second-quarter rental slate, other positive business trends and ongoing cost cuts will help boost results in the second half of this year.

He kept his “Buy” rating.

Xtra-vision has 186 stores in the Republic of Ireland and Northern Ireland, offering movies and games for rental or purchase, music, consumer electronics and mobile phones. It was purchased by Ireland’s Birchhall Investments Ltd.

Shares rose 6 cents, or 7 percent, to 98 cents.

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