Gallery Gets Bond Extension4 Sep, 2007 By: Erik Gruenwedel
Fiscally challenged Movie Gallery Sept. 4 said it has signed a forbearance agreement until Sept. 30 with holders of its 11% senior notes (bonds). The notes are due 2012.
The Dothan, Ala.-based No. 2 DVD rental company also said it has sent default notices to the agents of its second- and first-lien facilities and is in discussions with its second-lien lenders.
Gallery, which operates more than 4,500 Hollywood Video, Game Crazy and Gallery stores, last week received a third payment extension until Sept. 30 with lenders.
Gallery has struggled since it outbid No. 1 Blockbuster Inc. in 2005, paying $1.1 billion to acquire then No. 2 Hollywood Video.
The company lost $325 million in the second quarter (ended July 1), compared to $25 million during the same period last year, according to a filing with the Securities and Exchange Commission. Revenue fell 6% to $561 million, from $601 million last year.