Blockbuster to close as many as 960 stores nationwide

Blockbuster is planning to close as many as 960 stores by the end of next year. That would shrink the video rental chain
by more than 20 percent as it struggles against stiff competition from Netflix and Redbox.

The store closures
disclosed in documents filed today show Blockbuster is having to cut much deeper than it anticipated to save money and keep
its lenders happy.

Blockbuster now expects to close between 810 and 960 of its U.S. stores through 2010, up from
its the 380 to 425 stores that normally would be closed. If Blockbuster hits the high end of the new target for store closures,
it will represent 22 percent of its 4,356 U.S. stores. The Dallas-based company has closed 276 stores so far this year.

The chain did not disclose plans for specific store closings. There are at least 28 Blockbuster stores within 20 miles
of downtown Indianapolis, according to the company’s Web site.

Yesterday, an analyst said the video rental company’s
decision to issue $340 million of senior notes should put to rest investor concerns about liquidity.

Blockbuster said
earlier in the day that it would offer the notes due in 2014 in a private sale to institutional buyers. The company said it
plans to use the proceeds to pay down existing debt and for general corporate purposes.

The company will now have ample
liquidity to reinvest in store upgrades, retain attractive international assets, build out a distribution model and explore
new technology outlets, like games by mail and kiosks, Janney Montgomery Scott analyst Tony Wible said in a report to clients.