Blockbusted – Icahn cuts stake in troubled video chain

March 31, 2010

Blockbuster‘s biggest shareholder, and one of the market’s most prominent activist investors, is heading for the door, heaping another note of gloom to the video chain’s hopes to avoid bankruptcy.

Filings show Billionaire investor Carl Icahn cut his stake in Blockbuster by selling more than 13 million shares. Over the past week he trimmed his ownership of the Class A shares to 5.1 percent as of March 29, according to a federal filing. In January he reported a 16.9 percent stake. He also reduced his stake in the company’s Class B shares.

To be fair, Blockbuster is already positioning itself for a trip to Bankruptcyland, having said earlier this month that it might need to file for protection from creditors.

Blockbuster and Icahn go way back to at least 2004, when Icahn spent $83.8 million to buy a 5.8 percent of its Class A stock. At one point he served on the company’s board and publicly criticized then-Chief Executive John Antioco. Perhaps he is keeping the remaining stake just so he can continue to wag his finger.

So far, the road to restructuring is looking like a one-way street for the video rental chain. Blockbuster said on Monday it was not in compliance with NYSE’s minimum market value requirements, which requires listed companies to have a global market capitalization of at least $75 million over a 30-day trading period. The company faces a debt load of nearly $1 billion.

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