RICHMOND, Va., April 14 /PRNewswire-FirstCall/ -- Circuit City Stores,
Inc. today confirmed that it received an unsolicited, non-binding proposal
from Blockbuster Inc. (NYSE: BBI) to acquire all of the outstanding shares of
Circuit City for at least $6.00 per share in cash. Consistent with its
fiduciary duties, the Circuit City Board of Directors, in consultation with
its outside legal and financial advisors, will continue to carefully consider
and evaluate Blockbuster's unsolicited proposal. Circuit City advises
shareholders to take no action at this time with respect to the unsolicited
proposal from Blockbuster.
The Company noted that its Board of Directors has previously reviewed a
similar private proposal from Blockbuster. Circuit City, Blockbuster and their
respective financial advisors have been in a process of exchanging information
regarding the proposal, but to date Blockbuster has been unable to satisfy
Circuit City and its advisors that Blockbuster's proposal could be financed.
In particular, Blockbuster's proposal appears to contemplate a rights offering
of unprecedented size relative to the issuing company's market capitalization
and at a price that is at a significant premium to Blockbuster's current
market price. Circuit City's advisors have noted that most rights offerings,
of which there have been very few in the United States, occur at discounts to
market.
In addition, Circuit City and its advisors have a number of other
fundamental questions regarding the structure, sources and uses of funds and
consents required with respect to the proposed transaction. Among those
questions are whether the proposed acquisition would require a refinancing of
the existing Blockbuster debt, and if so, what would be the terms and
structure of any new debt; how large a rights offering would be required to
fund the transaction and what steps Blockbuster has taken to provide a
backstop to ensure successful execution of the rights offering contemplated;
and what precise internal and external approvals Blockbuster anticipates for a
proposed transaction, including approval of the contemplated rights offering
by Blockbuster shareholders and registration of the offering with the
Securities and Exchange Commission.
While willing to engage in discussions to further understand Blockbuster's
proposal, having shared certain information with Blockbuster, Circuit City is
unwilling to provide Blockbuster with additional detailed due diligence
information and embark on a highly conditional undertaking until these
questions are answered satisfactorily.
Wachtell, Lipton, Rosen & Katz is serving as Circuit City's legal counsel
and Goldman Sachs is serving as financial advisor.
About Circuit City Stores, Inc.
Circuit City Stores, Inc. (NYSE: CC) is a leading specialty retailer of
consumer electronics and related services. At February 29, the domestic
segment operated 682 Superstores and 11 other locations in 158 U.S. media
markets. At February 29, the international segment operated through 779
retail stores and dealer outlets in Canada. Circuit City also operates Web
sites at www.circuitcity.com, www.thesource.ca and www.firedog.com.
This communication may be deemed to be solicitation material in respect of
Circuit City's solicitation of proxies in connection with its 2008 Annual
Meeting of Shareholders. Circuit City and its directors and executive
officers may be deemed to be participants in such solicitation of proxies.
Information regarding the special interests of these directors and executive
officers in such solicitation of proxies will be included in any proxy
statement filed by Circuit City in connection with the 2008 Annual Meeting of
Shareholders. In addition, Circuit City files annual, quarterly and special
reports, proxy and information statements, and other information with the
Securities and Exchange Commission (SEC). These documents are available free
of charge at the SEC's Web site at www.sec.gov or from Circuit City at
http://investor.circuitcity.com. Investors should read any proxy statement
filed in connection with the 2008 Annual Meeting of Shareholders carefully
when it becomes available before making any voting or investment decision.
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SOURCE Circuit City Stores, Inc.
