Movie Gallery Stock Up On News of Split4 Dec, 2001 By: Joan Villa
Movie Gallery has approved its second 3-for-2 stock split this year and plans to complete the takeover of bankrupt chain Video Update by Dec. 21.
Movie Gallery's stock was up $1.02 to $26 per share on the news. The split will be paid Jan. 3 to shareholders of record as of Dec. 17.
Chairman and c.e.o. Joe Malugen says the board's approval of a stock dividend just three months after the company's last 3-for-2 split reflects confidence in the chain's prospects for future growth. "We also expect the split to expand the distribution and enhance the market liquidity of the company's stock,'' he added.
Movie Gallery also expects to take over Video Update's 320 stores following a bankruptcy reorganization hearing that was rescheduled to Dec. 18.
Video Update attorney Charles Dale III says the reorganization plan was "overwhelmingly" accepted by creditors and will likely be confirmed by the U.S. Bankruptcy Court in Delaware.
The plan calls for Gallery to convert its existing $5 million debtor-in-possession financing into new stock in the reorganized Update, contribute approximately $5 million to pay for administrative and priority claims and $2.5 million for unsecured creditors, and provide a $5 million working capital line of credit for the reorganized company.
Update headquarters will be moved from St. Paul, Minnesota, to Movie Gallery's base of Dothan, Alabama, where the company will be run by a board of directors consisting of Malugen, Gallery president Harrison Parrish, and senior v.p., secretary and general counsel Page Todd.
The acquisition will give Gallery more than 1,400 stores in 41 states and five Canadian provinces.