Las Vegas — Investor Mark Wattles has bought up 5.7 percent of Blockbuster stock, sending shares of the beleaguered video rental chain sharply higher yesterday.
Wattles, the founder of one-time rental rival Hollywood Video, used the proceeds of its sale to acquire Ultimate Electronics and buy a significant stake in Circuit City, where he agitated for changes in management and strategy.
Wattles successfully rebuffed Blockbuster’s attempted acquisition of Hollywood Video in 2005 but supported its proposed buyout of Circuit City last year. Blockbuster ultimately walked away from the deal after performing due diligence on the CE chain.
Blockbuster faces a cash crunch in August when two credit lines expire, and has hired a law firm to help it explore refinancing and other capital-generating alternatives.
In a filing, Wattles said he is confident that Blockbuster will be able to avoid a rumored bankruptcy by refinancing its credit lines or paying down debt with cash flow.
Blockbuster shares rose 17 percent on news of Wattles' investment, which made him a top-10 shareholder.