Another delay, another default for Movie Gallery
By Cindy Spielvogel -- Video Business,09/04/2007
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.
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| Submitted by: | Hlwy SMGR 9/25/2007 5:49:21 PM PT |
| Occupation: | Store Director Hollywood Video |
Right on! I second that...I just wish someone was honest and told us like it is. You are the only one I've seen do that. Thanks!
| Submitted by: | Topsy Kretts 9/4/2007 8:04:48 PM PT |
Coincidence? Movie Gallery must provide a store closing timetable by Thursday and our region is being visited by the local district managers, regional manager, and the zone VP. But the purpose of the store visits have not been given. Of course we've heard that the visits are just the annual visits or they are just looking at the store that have tanning as well, but come on now...It seems that headquarters needs a real live look at which store need to be shut down, hence the "tour."
Movie Gallery will try to do everything it can to pay off as much debt as it can before it goes bye-bye. It's even change its direction with the "E4" tactic (probably because of all the negativity that resulted from the "Metrics" program). Even if every previously viewed movie sells for 50% off, that won't make a dent in what they own the creditors.
Since the fourth quarter is usually MG's strongest money making period, it may work out for the creditors to start acting on the defaults in the last quarter.
Then again if all MG employees really find out what is going on behind closed doors and start to do a half ass job (as most of them do), then the store gets shut down because it is unprofitable and a liability and MG has unemployment to pay now...and the debts just keep on rising.
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