DOTHAN, Ala., April 2, 2008 /PRNewswire-FirstCall/ -- Movie Gallery, Inc.
("Movie Gallery") (Pink Sheets: MOVIQ) today announced that it plans to close
approximately 160 underperforming Movie Gallery and Hollywood Video stores in
its third and final round of store closures. This consolidation of store
operations is in addition to the closures previously announced on February 4,
2008 and September 25, 2007.
Joe Malugen, Chairman, President and Chief Executive Officer of Movie
Gallery, said, "While the decision to close stores is never easy, this final
consolidation will allow us to further focus our resources on those stores
with the strongest operating performance and best prospects for growth after
we emerge from bankruptcy. This is another positive step forward in our
restructuring to position the Company for profitability and long-term
success."
"Movie Gallery remains committed to its loyal customers and talented
employees. We will work with customers at affected stores to transfer their
accounts to other nearby Movie Gallery and Hollywood Video locations where
possible," continued Mr. Malugen. "I would also like to thank our many
associates and partners for their exceptional customer service and their
dedication to the Company. 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 expects liquidation sales at affected stores to begin in
approximately one week and to conclude by April 30.
About Movie Gallery
The Company is the second largest North American video rental company with
approximately 3,490 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:
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.
Analysts and Investors, Thomas Johnson of Movie Gallery, Inc.,
+1-334-702-2400; Media, Andrew B. Siegel or Meaghan A. Repko of Joele Frank,
Wilkinson Brimmer Katcher, +1-212-355-4449, for Movie Gallery, Inc.
