Movie Gallery Pays Off its Debt1 Nov, 2006 By: Jessica Wolf
Beleaguered Movie Gallery this week was able to pay against its nearly $1 billion in debt.
The No. 2 video rental chain announced Wednesday it has made a $17.9 million interest payment to 11% of its senior unsecured notes, which are due in 2012. Movie Gallery also paid down $28.4 million in term loan principal and interest payment to bank lenders at the end of September.
The chain has suffered against a slumping rental market and fairly bloated infrastructure costs remaining from its acquisition of Hollywood Video more than a year ago.
But, according to a statement last week, company executives believe that cash on hand, cash from operations and available credit will keep Movie Gallery in working capital and in compliance with their debtors throughout fiscal 2006.