Troubled DVD rental group Blockbuster may have to put up Canadian stores as collateral after failing to secure bank credit for stock.
The US giant, which is trying to sell its UK and European operations, revealed that it faces problems ensuring continued supply of Hollywood releases, highlighting concerns about whether it can survive, the Financial Times reported.
In a regulatory filing, Blockbuster said: “If the studios tighten their credit terms or if studios eliminate their provision of credit to us altogether, this could result in upfront cash commitments that we may be unable to sustain on a long-term basis.”
Blockbuster said the threat to supply was among a variety of factors that may lead to it seek bankruptcy protection and that it was considering raising cash to purchase stock by providing Canadian shops as collateral.
Mail-order DVD rental and kiosks have both taken a toll on Blockbuster’s core US business, which suffered a 16% like-for-like sales plunge in its fourth quarter.
Last month Blockbuster’s auditors warned that it may not be able to continue as a going concern unless its capital structure was strengthened and liquidity improved.