Hollywood Entertainment sets pricing in tender for 9 5/8% notes

New York, April 7 - Hollywood Entertainment Corp. announced pricing in its cash tender offer for its $225 million of 9 5/8% senior subordinated notes due 2011, saying it will pay $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, Inc.

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 $30.00 per $1,000 consent payment.

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

Tendered notes can be withdrawn up to the earlier of the consent deadline or 5 p.m. ET on the business day after the day on which Hollywood Entertainment announces it has received consents for a majority of the notes.

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).

Pricing has already been fixed in Blockbuster's tender, which used a similar formula but with a spread of 75 basis points. For each $1,000 principal amount, the sum on offer is $1,146.24 per $1,000 principal amount, including a $30.00 consent payment only payable for notes tendered by the consent deadline.

The tender is subject, among other things, to Blockbuster receiving enough consents to amend the indenture, to at least a majority of the notes being tendered and to the satisfaction or waiver of conditions to the tender of Hollywood Entertainment's stock.

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