Movie Gallery gets reprieve from lenders
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By Cindy Spielvogel -- Video Business, 7/23/2007
JULY 23 | Movie Gallery signed a forbearance agreement with senior lenders on its first lien credit facility, giving the retailer until Aug. 14 before the lenders can exercise the remedies entitled to them under Movie Gallery’s default.
“In the near future, we expect to present a longer-term solution to the lender group that will address the operational and financial issues currently impacting our business,” chairman, president and CEO Joe Malugen said.
Movie Gallery announced earlier this month that it was in default of its loan requirements because of a weaker than expected second quarter.
That prompted fears of bankruptcy, sending the company’s stock price below $1 and causing Standard & Poor’s to lower the company’s bond rating further into junk territory.
Movie Gallery had said it would consider options such as selling assets, closing stores at a faster rate, restructuring and other alternatives.
Although analysts had correctly predicted that the company would probably get a temporary forbearance on its credit terms, they would not rule out an eventual bankruptcy.
Movie Gallery’s stock rose from 56¢ to 62¢ in morning trading.
Meanwhile, Blockbuster Video declared its regular quarterly cash dividend of $18.75 per share on its Series A preferred stock, payable Aug. 15 to holders of record at the close of business on Aug. 1.
