Movie Gallery defers interest payments on credit facilities, Hollywood notes

By Caroline Salls

Pittsburgh, Sept. 12 - Movie Gallery, Inc. plans to defer the payment of interest due on Sept. 10 on its first- and second-lien credit agreements beyond the payment grace periods, according to an 8-K filed with the Securities and Exchange Commission.

In addition, Movie Gallery said subsidiaries Hollywood Entertainment Corp. and Hollywood Management Co. will defer the payment of interest due on Sept. 10 on their 9 5/8% senior subordinated notes due 2011 until the conclusion of the payment grace period.

Movie Gallery said the deferred interest payments might prompt events of default on the first- and second-lien credit facilities, the Hollywood notes and the company's 11% senior notes due 2012.

However, the company said it believes that the deferred payments do not constitute events of default under the credit agreements and that the deferred payments are covered under the first-lien facility and notes forbearance agreements.

Movie Gallery is a Dothan, Ala.-based video rental company.

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