S&P Lowers Gallery Credit Rating24 Sep, 2007 By: Erik Gruenwedel
The hits keep coming to Movie Gallery. The Dothan, Ala.-based No. 2 movie rental service last week had its credit rating cut from “CC” to junk “D” status after failing to meet an interest payment deadline for its second-lien term loan.
A “D” rating is considered default status, which Standard & Poor's Rating Service believes applies to all of Gallery's outstanding debt.
S&P maintained the “CC” non-investment grade status for Gallery's first-line and senior unsecured debt.
Gallery has struggled since outbidding Blockbuster Inc. and paying $1.1 billion for Hollywood Video in 2005.
Separately, Gallery's forbearance agreement extensions with lenders expire Sept. 30.