Blockbuster blasts investor seeking board seat, urges shareholders to reject bid

Blockbuster blasts investor seeking board seat

DALLAS — Blockbuster Inc. fired back Thursday at activist investor Gregory S. Meyer for trying to take a seat on its board, urging shareholders to vote instead for Blockbuster’s own candidate.

Blockbuster told shareholders in a letter that Meyer, “is not qualified to serve on your board and … if elected, he would pose a significant risk to the future of our company.”

The shareholders are to vote on board nominees at Blockbuster’s annual meeting June 24. Meyer wants to replace director Gary J. Fernandes, the chairman of a real estate investment company called FLF Investments.

Meyer founded a DVD rental kiosk business in 2001 called DVDXpress and later sold it to Redbox operator Coinstar Inc., which has emerged as a major competitor for Blockbuster. It rents DVDs from vending machines for $1 a night.

Blockbuster’s letter said Meyer has not been as successful in the DVD rental business as his credentials might imply. The company pointed out that Meyer is no longer an executive at Coinstar and said that DVDXpress was heavily indebted when he sold it.

Meyer said in an interview that Blockbuster was trying to smear him. He said he has never taken credit for the success of Redbox and finds it “laughable” that Blockbuster would criticize another company for having debt.

Meyer declined to comment on how much debt DVDXpress was carrying when he sold it.

Blockbuster warned investors in March that it may need to file for Chapter 11 protection because of nearly $1 billion in outstanding debt.

Reflecting the risk of default, the company’s shares have remained under $1 since last year. They rose less than one-third of a penny, or less than 1 percent, to 34.5 cents in afternoon trading Thursday.