Another delay, another default for Movie Gallery

By Cindy Spielvogel -- Video Business, 9/4/2007

SEPT. 4 | In the continuing saga of Movie Gallery delaying its day of reckoning as it runs up against various deadlines for rectifying its financial crisis, the company issued good news and bad news.

The good news is Movie Gallery was able to make another forbearance agreement with a creditor. The bad news: It is in default on another credit facility.

The latest forbearance agreement, made Aug. 31, is with Sopris Capital Advisors, the holder of the majority of Movie Gallery’s 11% senior notes due in 2012. Sopris has agreed to forbear taking action on Movie Gallery’s default until Sept. 30, unless certain conditions occur before then, such as a bankruptcy-related default.

Movie Gallery earlier had extended its forbearance agreement with some first lien lenders until Sept. 30 as well.

Movie Gallery also announced it notified the agent for its second lien credit facility that it is in default on that loan. The company said it is “in discussions with its second lien lenders regarding the current situation.”

Movie Gallery was required to notify its first lien lenders of this latest default.