PROVIDENCE – Video rental chain Blockbuster Inc. said Tuesday it may file for Chapter 11 bankruptcy as the company falters under a heavy debt load and competition from Netflix Inc. and Redbox.
Dallas-based Blockbuster said in a regulatory filing it may have to file for bankruptcy protection to complete a debt exchange. The company, which owes $855.9 million, reported a net loss of $558.2 million last year as sales dropped 20 percent to $4.1 billion.
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CEO James Keyes told Bloomberg News a bankruptcy remained unlikely. But Blockbuster said it may have to use its Canadian stores as collateral for Hollywood studios’ DVDs if it is unable to get bank credit.
Blockbuster has closed a large share of its local stores in recent years as part of a larger downsizing nationwide and a move to build a kiosk business like Coinstar Inc.’s Redbox line and a mail-order business modeled on Netflix Inc.
At the start of this year, Blockbuster had 14 stores in Rhode Island, three of which were franchised. That was down from 18 stores in 2008 and 23 stores in 2007.
In Massachusetts, the company had 63 stores at the start of this year, two of them franchised. The company had 89 Bay State stores in 2008 and 120 in 2007.
Blockbuster rival Movie Gallery Inc., which owns the Hollywood Video chain, filed for bankruptcy protection for the second time in three years last month. The company has also closed a number of local stores.
Additional information is available at blockbuster.com.
