PORTLAND, Ore. -- In a major step toward spinning Blowout Entertainment off as a separate company, the Rentrak Corp. subsidiary here has received $12 million in total financing, said Ron Berger, Rentrak chairman and chief executive officer.
The financing will allow Blowout to keep up with the rapid-fire expansion plans of the Wal-Mart Supercenters in which it operates leased-space video rental departments, he said. The financing includes $5 million in equity investments and $7 million in debt, he said.
"Twelve million dollars will be sufficient to handle the working capital and expansion needs for rollouts, at least in the next year," said Berger, who was interviewed during the East Coast Video Show in Atlantic City, N.J. "This financing was a crucial ingredient in spinning the company off. We needed to make sure that if we are dividending the stock out to our shareholders, in the process of setting Blowout free, that Blowout has adequate capital to meet its needs," he said.
Rentrak is spinning Blowout off to avoid being in competition with its customers, said Berger. "We intend to issue a dividend of Blowout stock to our shareholders. But we will probably keep 20% or less at the company because we think it is a good investment," he said.
Blowout operates 200 leased-space, store-within-a-store video departments in Wal-Mart and Kmart supercenters, as well as in Ralphs' supermarkets. Rentrak is a shared-transaction-fee distributor of videocassettes for the rental market. More than 4,700 outlets in North America, mostly specialty stores, use the Rentrak system to obtain new releases from about 30 suppliers.