Hollywood Entertainment gets tenders for 99.8% of 9 5/8% notes

New York, April 22 - Hollywood Entertainment Corp. said its offer to buy its $225 million of 9 5/8% senior subordinated notes due 2011 expired at 5 p.m. ET on April 21 with $224.55 million or 99.8% of the securities tendered.

Hollywood said it plans to buy the notes on April 27, subject to all the conditions being satisfied including the acquisition of the company by Movie Gallery, Inc.

The company previously said on April 8 that it had received the necessary consents to amend the notes.

Hollywood Entertainment said on April 7 it had fixed pricing at $1,142.13 per $1,000 principal amount, including a $30 per $1,000 consent payment that will be paid to all holders.

Pricing was based on a spread of 50 basis points over a reference security, increased from 62.5 basis points on April 6.

As well as changing pricing, Hollywood on April 6 also extended the consent deadline, previously 5 p.m. ET on April 7, to match the expiration date of 5 p.m. ET on April 21.

The offer is being carried out in connection with the acquisition of Hollywood Entertainment, a Portland, Ore., movie rental chain, by Movie Gallery.

Pricing was set using a formula. For each $1,000 principal amount, the company will pay the present value on the expected payment date of $1,048.13 plus interest from the payment date through March 15, 2007. The present value will be determined using the yield to maturity of the 3.375% U.S. Treasury note due Feb. 28, 2007 plus a fixed spread of 50 basis points. The total includes a $30 per $1,000 consent payment.

Hollywood Entertainment will also pay accrued interest up to but excluding the payment date.

The consent solicitation is to eliminate substantially all of the restrictive covenants and certain events of default in the note indenture.

Conditions to the tender include the receipt of consents from holders of a majority of the notes and completion of the acquisition.

Wachovia Securities is dealer manager and solicitation agent (704 715-8341 or 866 309-6316). MacKenzie Partners, Inc. is information agent (212 929-5500 or 800 322-2885).

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