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Movie Gallery investor ups stake in company, still proposing rights offering to cut debt
New York, May 8 - Movie Gallery, Inc. investor Schultze Asset Management, LLC increased its stake in the company and reiterated its plan to ask the company to carry out a rights offering, with the cash raised to go to debt reduction.
Schultze reported its stake in Movie Gallery is now 4,774,850 or 14.4% of the total, up from 4,268,314 or 13.4% at the last report on May 11, 2006.
Arrow Distressed Securities Fund, controlled by Schultze, bought 37,857 shares at $3.5745 on April 27 while Schultze Master Fund, Ltd. bought 407,969 shares from April 27 to May 3 at prices from $3.45 to $3.60, according to an SC 13D filing with the Securities and Exchange Commission.
Schultze also continues to own "some" of the company's 11% senior notes due 2012.
The investor repeated its statement from May 2006 that it intends to contact company management and/or the board of directors to propose "a number of possible shareholder value-enhancing steps."
Suggestions could include rights offering to raise funds that would go to reducing bank and/or bond debt in order to lower future interest expense or be applied to general corporate purposes.
Movie Gallery is a Dothan, Ala., video rental company.
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