DOTHAN, Ala., Feb. 4 /PRNewswire-FirstCall/ -- Movie Gallery, Inc.
("Movie Gallery") (Pink Sheets: MOVIQ) today announced that it plans to
close approximately 400 underperforming and unprofitable Movie Gallery and
Hollywood Video stores. This consolidation of store operations is in
addition to the closures previously announced on September 25, 2007.
Joe Malugen, Chairman, President and Chief Executive Officer of Movie
Gallery, said, "The decision to close stores is always difficult, but we
are confident that we are taking the right steps to emerge from bankruptcy
as a stronger company, better positioned for long-term success. We have
made significant progress in restructuring Movie Gallery and this action
will allow us to further focus our resources on those stores with the
strongest operating performance and best prospects for future growth."
"We will work with customers at affected stores to transfer their
accounts to other nearby Movie Gallery and Hollywood Video locations where
possible," Mr. Malugen added. "I would also like to thank our many
associates and partners for their dedication to the Company and outstanding
customer service. As always, we remain committed to treating all affected
employees fairly and providing the necessary assistance to make this
transition as smooth as possible."
Movie Gallery once again has retained the Great American Group, an
outside professional services firm, to assist it in conducting sales of the
inventory at the stores scheduled for closure.
For more information regarding the disposition of the leaseholds for
the stores that will be closing, please contact Keen Consultants / KPMG
Corporate Finance LLC, 1305 Walt Whitman Road, Suite 200, Melville, NY
11747, Telephone: 631-351-7800.
About Movie Gallery
The Company is the second largest North American video rental company
with approximately 3,890 stores located in all 50 U.S. states and Canada
operating under the brands Movie Gallery, Hollywood Video and Game Crazy.
Since Movie Gallery's initial public offering in August 1994, the Company
has grown from 97 stores to its present size through acquisitions and new
store openings. For more information about the Company, please visit our
website: http://www.moviegallery.com.
Forward-looking Statements
This press release, as well as other statements made by Movie Gallery
may contain forward-looking statements within the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995, that reflect, when
made, the Company's current views with respect to current events and
financial performance. Such forward-looking statements are and will be, as
the case may be, subject to many risks, uncertainties and factors relating
to the Company's operations and business environment, which may cause the
actual results of the Company to be materially different from any future
results, express or implied, by such forward-looking statements. Factors
that could cause actual results to differ materially from these
forward-looking statements include, but are not limited to, the following:
(i) the ability of the Company to continue as a going concern; (ii) the
ability of the Company to operate subject to the terms of the DIP Credit
Agreement; (iii) the Company's ability to obtain court approval with
respect to motions in the Chapter 11 cases; (iv) the ability of the Company
to develop, prosecute, confirm and consummate one or more plans of
reorganization with respect to the Chapter 11 cases, including a plan
consistent with the terms set forth in the plan term sheet attached to the
Lock Up, Voting and Consent Agreement dated as of October 14, 2007 or the
plan of reorganization attached to the plan support agreement dated January
22, 2008, both of which have been executed by the Company; (v) risks
associated with a termination of the $150 million secured super- priority
debtor in possession credit agreement and financing availability; (vi)
risks associated with third parties seeking and obtaining court approval to
terminate or shorten the exclusivity period for the Company to propose and
confirm one or more plans of reorganization, for the appointment of a
Chapter 11 trustee or to convert the cases to Chapter 7 cases; (vii) the
ability of the Company to obtain and maintain normal terms with vendors and
service providers; (viii) the Company's ability to maintain contracts and
leases that are critical to its operations; (ix) the potential adverse
impact of the Chapter 11 cases on the Company's liquidity or results of
operations; (x) the ability of the Company to execute its business plans
and strategy, including the operational restructuring initially announced
in 2007, and to do so in a timely fashion; (xi) the ability of the Company
to attract, motivate and/or retain key executives and associates; (xii)
general economic or business conditions affecting the video and game rental
and sale industry (which is dependent on consumer spending), either
nationally or regionally, being less favorable than expected; and (xiii)
increased competition in the video and game rental and sale industry. Other
risk factors are listed from time to time in the Company's Annual Report on
Form 10-K for the year ended December 31, 2006 and subsequent reports filed
with the Securities and Exchange Commission. Movie Gallery disclaims any
intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events and/or otherwise.
Similarly, these and other factors, including the terms of any plan of
reorganization ultimately confirmed, can affect the value of the Company's
various prepetition liabilities, common stock and/or other equity
securities. Additionally, no assurance can be given as to what values, if
any, will be ascribed in the bankruptcy proceedings to each of these
constituencies. A plan or plans of reorganization could result in holders
of Movie Gallery's common stock or other equity interests and claims
relating to prepetition liabilities receiving no distribution on account of
their interest and cancellation of their interests and their claims and
cancellation of their claims. Under certain conditions specified in the
Bankruptcy Code, a plan of reorganization may be confirmed notwithstanding
its rejection by an impaired class of creditors or equity holders and
notwithstanding the fact that certain creditors or equity holders do not
receive or retain property on account of their claims or equity interests
under the plan. In light of the foregoing, the Company considers the value
of the common stock and claims to be highly speculative and cautions equity
holders that the stock and creditors that the claims may ultimately be
determined to have no value. Accordingly, the Company urges that
appropriate caution be exercised with respect to existing and future
investments in Movie Gallery's common stock or other equity interest or any
claims relating to pre-petition liabilities. The proposed plan of
reorganization currently provides that all of Movie Gallery's common stock
and other equity interests will be cancelled for no consideration.
Contacts:
Analysts and Investors: Thomas Johnson, Movie Gallery, Inc., 334-702-2400
Media: Andrew B. Siegel or Meaghan A. Repko of Joele Frank, Wilkinson
Brimmer Katcher, 212-355-4449
SOURCE Movie Gallery, Inc.
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Related links:
http://www.moviegallery.com
CONTACT:
Analysts and Investors, Thomas Johnson, Movie
Gallery, Inc., +1-334-702-2400; or Media, Andrew B. Siegel, or
Meaghan A. Repko of Joele Frank, Wilkinson Brimmer Katcher,
+1-212-355-4449
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