Movie Gallery debt converted to equity
Debt holder gets $151 million in retailer's stock
By Danny King -- Video Business, 10/8/2008
OCT. 8 | Movie Gallery said this week that debt holder Sopris Capital Advisors completed its planned conversion of debt into equity, allowing the No. 2 U.S. movie-rental chain behind Blockbuster to cut debt in the wake of its emergence from bankruptcy five months ago.
Sopris converted $151.4 million of debt to Movie Gallery stock valued at $10 a share, Movie Gallery said in a statement this week. Movie Gallery last month said Sopris, whose first lien debt gave it the highest priority for repayment in the event of a default, would convert between $130 million and $205 million of debt into equity.
"This debt restructuring significantly improves our balance sheet and reduces our ongoing interest expense," Movie Gallery CEO C.J. "Gabe" Gabriel said in a statement.
Movie Gallery has overhauled its leadership since exiting bankruptcy in May. The company, whose debt from its $1.2 billion acquisition of Hollywood Entertainment in 2005 helped drive it into bankruptcy last year, has closed more than 1,000 stores since September.
As part of Movie Gallery's emergence from bankruptcy, Sopris converted some of its second lien debt to equity.
