Hollywood Entertainment (NASDAQ:HLYW)
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Hollywood Board Expresses No Opinion and Remains Neutral Toward
Blockbuster's Unsolicited Debt Tender Offer
PORTLAND, Ore., Feb. 25 /PRNewswire-FirstCall/ -- Hollywood Entertainment
Corporation (NASDAQ:HLYW) announced today that its Board of Directors
unanimously expressed no opinion and remained neutral toward the unsolicited
offer by Blockbuster Inc. (NYSE:BBI) to purchase all of Hollywood's outstanding
9.625% Senior Subordinated Notes due 2011 and the related consent solicitation.
The Board arrived at this position after receiving the unanimous recommendation
of a Special Committee of independent directors, which considered the facts and
circumstances surrounding Blockbuster's unsolicited note tender offer. Because
the Board owes fiduciary duties to Hollywood's shareholders, who may be
affected by a noteholder's decision to tender or not to tender notes, and owes
no fiduciary duties to Hollywood's noteholders, the Board and Special Committee
concluded it would not be appropriate to provide a recommendation as to whether
noteholders should tender notes. The Board, however, strongly urged
Hollywood's noteholders to carefully consider all aspects of Blockbuster's
offer before deciding for themselves whether to tender. Among the factors the
Board and the Special Committee considered and which noteholders should be
aware of in making their determination are:
-- under the terms of Blockbuster's note tender offer, holders who tender
will not be permitted to withdraw or revoke their tender, leaving them
unable to tender in response to a more attractive offer;
-- Blockbuster's unsolicited note tender offer is subject to a number of
conditions, including the satisfaction or waiver of the conditions to
Blockbuster's February 4, 2005 unsolicited offer to purchase
Hollywood's common stock;
-- Blockbuster's unsolicited common stock tender offer is itself subject
to numerous conditions which reduce the likelihood of the transaction
being completed. Because Blockbuster's note tender offer is
conditioned upon the satisfaction or waiver of the conditions to
Blockbuster's common stock tender offer, the note tender offer is
equally as unlikely to be completed, unless these conditions are waived
for the note tender offer; and
-- the Board and Special Committee have previously recommended that
Hollywood's shareholders reject Blockbuster's unsolicited common stock
tender offer, in part due to the numerous conditions which reduce the
likelihood that the transaction will be completed. The factors
considered by the Board and the Special Committee in arriving at this
conclusion are included in a Solicitation/Recommendation Statement on
Schedule 14D-9 that was filed with the Securities and Exchange
Commission on February 17, 2005.
The announcements contained in this press release were made pursuant to
Hollywood's obligations under Rule 14e-2 under the Securities Exchange Act of
1934.
UBS Investment Bank and Lazard provided financial advice to the Special
Committee in connection with these matters. Gibson, Dunn & Crutcher LLP
provided legal advice to the Special Committee and Stoel Rives LLP provided
legal advice to Hollywood in connection with these matters.
Recommendation on Blockbuster's Common Stock Tender Offer Remains
Unchanged
The determination of the Board announced today does not change the
recommendation of the Board that shareholders reject Blockbuster's unsolicited
common stock tender offer announced on February 17, 2005.
Additional Information
The proxy statement relating to Movie Gallery's acquisition of Hollywood that
Hollywood plans to file with the Securities and Exchange Commission and mail to
its shareholders will contain information about Hollywood, Movie Gallery, the
proposed merger and related matters. Shareholders are urged to read the proxy
statement carefully when it is available, as it will contain important
information that shareholders should consider before making a decision about
the merger. In addition to receiving the proxy statement and a white proxy card
from Hollywood by mail, shareholders will also be able to obtain the proxy
statement, as well as other filings containing information about Hollywood,
without charge, from the SEC's website (http://www.sec.gov/) or, without
charge, from Hollywood. The proxy statement will also be available from
MacKenzie Partners, Inc. by calling (800) 322-2885 toll-free or by email
request to: . This announcement is neither a solicitation of proxy, an offer to
purchase nor a solicitation of an offer to sell shares of Hollywood.
Hollywood and its executive officers and directors may be deemed to be
participants in the solicitation of proxies from Hollywood's shareholders with
respect to the proposed merger. Information regarding any interests that
Hollywood's executive officers and directors may have in the transaction with
Movie Gallery will be set forth in the proxy statement.
DATASOURCE: Hollywood Entertainment Corporation
CONTACT: Daniel Burch, +1-212-929-5748, Larry Dennedy, +1-212-929-5239,
or Bob Marese +1-212-929-5405, all for Hollywood