UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 23, 2005
MOVIE GALLERY, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-24548 63-1120122
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
900 West Main Street
Dothan, Alabama 36301
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(334) 677-2108
-------------------------------------------------------------
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITEIVE AGREEMENT.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION
UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
On September 23, 2005, Movie Gallery, Inc. (the "Company") entered
into a First Amendment (the "First Amendment") to the Credit Agreement
(as defined herein), among the Company, Movie Gallery Canada, Inc.,
Wachovia Bank, N.A., as U.S. Administrative Agent and U.S. Issuing
Bank, and Congress Financial Corporation (Canada), as Canadian
Administrative Agent and Canadian Issuing Bank (together with Wachovia
Bank, N.A., the "Administrative Agents"). The First Amendment amends
the Credit Agreement dated as of April 27, 2005 (the "Credit
Agreement") among the Company, Movie Gallery Canada, Inc., and a
syndicate of financial institutions, including Wachovia Capital Markets
LLC, as sole lead arranger and sole book running manager, Merrill
Lynch, Pierce Fenner & Smith Incorporated, as syndication agent, and
the Administrative Agents.
The First Amendment provides for additional borrowings of $50.0
million, or an aggregate of $750.0 million, under the Term Loan B
facility of the Credit Agreement and increases by $10.0 million, to
$40.0 million, the letter of credit sublimit under the revolving credit
facility of the Credit Agreement. The overall revolving credit
facility amount will remain at $75.0 million.
Pursuant to the First Amendment, the interest rate margin applicable to
the Term Loan B facility increases by 0.75%, to 3.75% per annum for
loans bearing interest on the adjusted Eurodollar rate and to 2.75% per
annum for loans bearing interest at the applicable base rate of
Wachovia Bank, N.A. Further, the First Amendment adds an additional
pricing tier applicable to the Term Loan A and revolving credit
facilities if the Company's leverage ratio exceeds 3.25 to 1.00 and
provides for an interest rate margin of 3.50% over LIBOR and 2.50% over
the base rate. The First Amendment also provides that any optional
prepayment of the Term Loan B within one year of the effective date of
the First Amendment will be subject to a 1.00% prepayment premium.
The First Amendment also amends the Company's obligations with respect
to maintaining certain financial ratios. Under the First Amendment,
the Company will initially be required to maintain through the end of
the Company's second fiscal quarter a maximum leverage ratio of not
greater than 4.00 to 1.00, a minimum fixed charge coverage ratio of not
less than 1.05 to 1.00 and a minimum interest coverage ratio of 3.00 to
1.00. Thereafter, the Company's maximum leverage ratio decreases, and
the Company's minimum fixed charge coverage ratio and interest coverage
ratio increase, in accordance with the original schedule set forth in
the Credit Agreement prior to the First Amendment.
If the Company's leverage ratio exceeds 2.00 to 1.00, the First
Amendment requires mandatory repayments of between 50% and 100% of the
Company's excess cash flow as calculated under the Credit Agreement.
As a condition to obtaining the lenders' consent to the First
Amendment, the Company will pay an amendment fee equal to 0.25% of the
aggregate total commitments of those lenders consenting to the
amendment, including those lenders that provide the $50.0 million of
additional commitments under the Term Loan B facility.
The foregoing description of the First Amendment is qualified in its
entirety by reference to the First Amendment, a copy of which is
attached hereto as Exhibit 10.1 and is incorporated herein by
reference.
ITEM 8.01. OTHER EVENTS
On September 23, 2005, Movie Gallery issued a press release announcing
that it had entered into the First Amendment to the Credit Agreement.
A copy of the press release is attached hereto as Exhibit 99.1 and is
incorporated by reference in its entirety into this Item 9.01.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
10.1 First Amendment, dated September 21, 2005 by and among
Movie Gallery, Inc., Movie Gallery Canada, Inc., Wachovia Bank, N.A.,
and Congress Financial Corporation (Canada), to the Credit Agreement
dated April 27, 2005.
99.1 Press Release dated September 23, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
MOVIE GALLERY, INC.
Date: September 28, 2005
/S/ Timothy R. Price
- ----------------------------
Timothy R. Price
Executive Vice President and
Chief Financial Office
INDEX TO EXHIBITS
10.1 First Amendment, dated September 21, 2005 by and among Movie
Gallery, Inc., Movie Gallery Canada, Inc., Wachovia Bank, N.A., and
Congress Financial Corporation (Canada), to the Credit Agreement dated
April 27, 2005.
99.1 Press Release dated September 23, 2005.