Thursday, September 17, 2009

Notable financing (BBI)

AlphaNinja - I noted on Tuesday that Blockbuster (BBI) laid out an ambitious but well thought-out path towards operational improvement. They're going to shutter underperforming stores and aggressively take on Redbox in the kiosk-based DVD rental market.

Today however, the company disclosed what it costs them to do business -->> more accurately, their cost of capital. It's huge, north of 13% due to the bonds selling for less than full value. Just as Microsoft and Dell borrowing at about 5% indicates stable, fat cash flows, Blockbuster's expensive financing indicates serious doubts about their prospects.

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