Blockbuster to sell $340 million secured five-year springing maturity notes Sept. 14 week

By Paul A. Harris

St. Louis, Sept. 14 - Blockbuster Inc. will host investor calls on Tuesday and Wednesday for a $340 million offering of five-year first-lien senior secured notes (expected ratings B1/B), according to an informed source.

Pricing is expected late this week.

J.P. Morgan Securities Inc. is running the books for the Rule 144A and Regulation S for life deal.

The non-callable notes come with a springing maturity in May 2012 if the company's 9% senior subordinated notes are not refinanced.

The notes feature a mandatory amortization at 106 (approximate 33% by May 2012 and 63% by maturity).

The notes will rank pari passu with Blockbuster's bank debt.

Covenants include a maintenance capital expenditures covenant, a mandatory asset sale debt paydown and an excess cashflow sweep covenant.

Proceeds will be used to repay the revolving credit facility, to repay a Canadian revolver and to fund general corporate purposes.

The movie rental company is launching a concurrent amendment and extension of its term loan B.

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