A group of shareholders in Blockbuster Inc are considering an investment in the bankrupt video chain and are seeking information about its push into digital, according to court documents.
The information requests are specific to the information needs we have received from strategic partners currently evaluating Blockbuster as an equity investment, said a statement from the shareholders' group.
Any investment proposal would challenge the company's current plan to exit bankruptcy under control of a group led by billionaire investor Carl Icahn and a group of hedge funds.
Under the current plan, the company would wipe away most of its $1 billion debt by giving the company's equity to its secured bondholders. Most of the company's $665 million in secured bonds is held by the Icahn group.
Unsecured bondholders, who are owed more than $300 million, and shareholders would get nothing under the Icahn plan.
That plan is subject to court approval. One of the best ways to challenge a bankruptcy plan is to come up with the money to back a better proposal, which is what shareholders seem to be trying to do.
The shareholders' group believes that the value of the debtors' enterprises is worth considerably more that the $1.2 billion value line set by the debtors, according to the filing in Manhattan's bankruptcy court.
The $1.2 billion figure is the amount of claims that would have to be paid before shareholders get any money, and it is significantly more than the company's value under the Icahn plan.
A company spokeswoman and an attorney for Blockbuster did not immediately return a call for comment.
The shareholder group is made up more than 35 individuals holding about 28 million of the company's 147 million shares, according to court documents.
The shareholders appear to be looking for information about the company's plans to distribute movies digitally.
The group asked the bankruptcy court to direct the company to turn over details of its financial relationships with a host of technology and telecommunications companies: Comcast Corp, Verizon Communications Inc, Google Inc, Samsung Electronics Co Ltd and Best Buy Co Inc, among others.
Blockbuster announced last month it had signed up six new partners for distributing movies digitally to devices such as mobile phones, TVs and Blu-ray players.
The shareholders also requested a breakdown of the expenses by the Blockbusters' digital entertainment unit and reports and market studies that the company has done.
The company's shares rose 10 percent on Wednesday to 13 cents in pink sheet trading. Activity in the stock has spiked in recent weeks to the highest volume in about six months, and along with it the shares have doubled.
However, the company's unsecured bonds, which would be paid off before the shareholders get anything, continue to trade around 1 to 2 cents on the dollar.
The case is In re: 10-14997, U.S. Bankruptcy Court, Southern District of New York.
(Reporting by Tom Hals; editing by Carol Bishopric)