S&P drops Movie Gallery

Standard & Poor's said it lowered its corporate credit rating on Movie Gallery Inc. to CCC+ from B- based on the announcement that the company was not able to meet its financial covenants for the fiscal quarter ended July 1 and that the company is exploring available restructuring and strategic alternatives.

The outlook is developing.

According to S&P, Movie Gallery remains challenged by poor industry fundamentals while sharp declines in its core rental business have exacerbated already-weak operating performance.

S&P said it will continue to monitor the situation and make updates as additional information becomes available.

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