Movie Gallery Restructures Debt16 Mar, 2006 By: Jessica Wolf
Movie Gallery has gotten some leeway from its creditors and put the brakes on spending.
Thursday, March 16, the company announced an amendment to its senior credit facility. Movie Gallery has garnered relaxed terms on financial covenants. Meanwhile, interest rate terms have been increased, and some mandatory prepayment provisions have been modified on the company's debts.
Moreover, the company has new restrictions on its ability to incur debt, pay dividends, redeem capital stock, make capital expenditures and make acquisitions.
"We are pleased to have reached an agreement with our bank lenders," said Joe Malugen, chairman, president and CEO of Movie Gallery. "Movie Gallery continued to generate positive cash flow during 2005 and finished the year with a solid liquidity position of approximately $135.2 million in cash and cash equivalents.
“With a successful amendment to our senior credit facility, we can now focus on implementing initiatives to drive our top-line performance and further improve our operating efficiencies. As part of these efforts, we will aggressively right size the Company's store foot-print, close unprofitable stores, divest non-core assets, and continue the consolidation of our back office support center functions.
“We expect these initiatives will help offset the continued softness that we are seeing in the box-office release schedule."