Gallery Converts Debt to Equity6 Oct, 2008 By: Erik Gruenwedel
Movie Gallery Oct. 6 said it successfully converted $151.4 million of first-lien debt into more than 15 million shares of common stock valued at $10 per share.
The No. 2 DVD rental chain and Sopris Capital Advisors, the private equity firm that owns much of the Dothan, Ala.-based company’s pre-bankruptcy debt, last month sought to convert up to $205 million of first-lien debt into common stock.
“This debt restructuring significantly improves our balance sheet and reduces our ongoing interest expense,” said C.J. Gabriel, president and CEO of Gallery, in a statement.
When Gallery emerged from Chapter 11 protection in May, Sopris converted $72 million of Gallery’s $175 million second-lien debt into equity (stock) of the restructured company.
Gallery has said it would accept financial assignments up to $250 million with lenders associated with the deal in exchange for common stock at $10 per share. An assignment typically refers to the transfer of a registered security from one owner to another.