S&P cuts Movie Gallery

Standard & Poor's said it lowered Movie Gallery Inc.'s corporate credit rating to CC from CCC+ based on the company's extremely poor liquidity position. S&P said it also downgraded the company's bank loans and senior unsecured debt to CC, which indicates a high vulnerability to nonpayment.

The agency lowered the issuer's $100 million revolving credit facility and $600 million first-lien term loan to CC with a recovery rating of 4 from CCC+ and its $175 million second-lien term loan to CC with a recovery rating of 6 from CCC-.

The outlook has been revised to negative.

Movie Gallery remains challenged by poor industry fundamentals, with sharp declines in its core rental business exacerbating already-weak operating performance, the agency said.

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