Blockbuster extends tender for Hollywood Entertainment's 9 5/8% notes

New York, March 9 - Blockbuster Inc. said it has extended its cash tender offer for any and all of Hollywood Entertainment Corp.'s $225 million principal amount of 9 5/8% senior subordinated notes due 2011 to midnight ET on March 24 from midnight ET on March 11.

By the close of business on March 8, holders had tendered $69.892 million of the notes.

At its last announcement on Feb. 28, Blockbuster disclosed pricing in the tender offer, saying it will pay $1,146.24 per $1,000 principal amount for notes tendered by the consent deadline, including a $30 consent payment. Holders who tender after the consent deadline will receive $1,116.24 per $1,000 principal amount.

Blockbuster announced the tender on Feb. 11 in connection with its previously announced exchange offer for all the outstanding shares of Hollywood Entertainment.

In addition to the tender for the notes, Blockbuster is soliciting consents to amend the note indenture to eliminate substantially all of the restrictive covenants and certain events of default.

The tender is subject, among other things, to Blockbuster receiving enough consents to amend the indenture, to at least a majority of the notes being tendered and to the satisfaction or waiver of conditions to the tender of Hollywood Entertainment's stock.

For each $1,000 principal amount of the notes, the Dallas video rental chain is offering the present value on the payment date of $1,048.13 plus interest that would be paid from the payment date through March 15, 2007. The value will be fixed on the 11th business day before the offer expires using a spread of 75 basis points over the yield to maturity of the 2.25% U.S. Treasury note due Feb. 15, 2007.

The total includes a consent payment of $30.00 per $1,000 principal amount, which will only be paid to holders who tender by the consent date.

The consent date will be the later of Feb. 25 or three business days after Blockbuster's announcement of the termination of the agreement and plan of merger dated Jan. 9 between Hollywood Entertainment, Movie Gallery Inc. and TG Holdings Inc.

Holders who tender by the consent date may not withdraw or revoke their tender, except under limited circumstances after the consent date.

Holders who tender their notes after the consent date will not receive the consent payment.

Credit Suisse First Boston LLC (800 820-1653), Citigroup Global Markets Inc. (800 558-3745) and JP Morgan Securities Inc. (866 834-4666) are dealer managers and solicitation agents. Morrow & Co. Inc. is the information agent (hollywood.info@morrowco.com or 800 654-2468).

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