Bankrupt Blockbuster Inc. has agreed to be sold for $290 million to a group of investors in a deal that requires 609 of its video rental stores to begin liquidating by the end of the month.
It was not known if any of Blockbuster's 26 Erie County stores are slated for closure, but the purchase agreement refers to the 609 as "initial liquidation stores," suggesting there will be more.
Dallas-based Blockbuster limited its comments to those contained in a news release.
The purchase offer from Cobalt Video Holdco LLC is a so-called "stalking horse" bid, which Blockbuster hopes will attract other bidders who will offer more.
The Cobalt group includes funds managed by Monarch Alternative Capital LP, Owl Creek Asset Management LP, Stonehill Capital Management LLC and Varde Partners Inc. They all hold secured Blockbuster debt, so they stand to benefit if someone else buys the company for more than the amount they paid for their Blockbuster debt.
The deal needs approval from the federal bankruptcy judge overseeing Blockbuster's reorganization. After the judge approves it, other bidders would have 30 days to submit bids, the company said. That would prompt an auction.
Blockbuster said it aims to close a final sale by April 20.
Blockbuster used to be the dominant U.S. movie rental chain. But it lost money for years as customers shifted to Netflix, video on demand and DVD rental kiosks.
When it filed for bankruptcy protection in September it was down to 3,000 stores. In December, the chain said it planned to close 182 stores in the next few months.