Movie Gallery reorganization plan confirmed by Court
By Cindy Spielvogel -- Video Business, 4/10/2008
APRIL 10 | The U.S. Bankruptcy Court in Richmond, Va., has confirmed Movie Gallery’s reorganization plan.
The company expects to emerge from bankruptcy this quarter.
“The court’s confirmation of our plan is a major milestone for Movie Gallery,” stated Joe Malugen, chairman, president and CEO of Movie Gallery. “Movie Gallery is now poised to emerge as a competitive and financially stable company. We are very proud of what we have been able to accomplish during our short time in Chapter 11 and look forward to working with all of our stakeholders through the remainder of our restructuring and beyond.”
The plan involves an exit financing facility providing the company with $100 million and another facility of up to $25 million in letters of credit for vendors.
The company’s first lien debt will remain in place on restructured terms, along with some of its second lien. About $72 million of the company’s $175 million second lien, held by Sopris Capital Advisors, will be converted into equity in the reorganized company.
Movie Gallery’s $325 million in senior notes and most other general unsecured claims will be converted into new equity of the reorganized company. Sopris will invest an additional $50 million to buy new equity.
Existing shares of common stock will be canceled.
Movie Gallery also reported that because of the bankruptcy proceedings and other concerns, it will be unable to file its annual report in a timely manner.
