Movie Gallery to hold lender call asking for covenant relief, term loan add-on

By Sara Rosenberg

New York, Sept. 14 - Movie Gallery Inc. is scheduled to hold a conference call on Thursday at which time lenders will be presented with a proposed amendment that will include covenant relief and a $50 million term loan add-on, according to a fund manager.

Wachovia is the lead bank on the deal.

The term loan B add-on is being sought because a franchisee of several Hollywood Video stores is exercising his option to put his stores back to the company, the fund manager explained.

"Not sure which covenants for sure [will be amended] but I'd guess the leverage covenant is definitely one of them," the fund manager added.

Movie Gallery is a Dothan, Ala.-based owner and operator of specialty video stores. The company purchased Hollywood Entertainment Corp. in a $1.25 billion transaction this year.

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