Movie Gallery's bonds jumped 10 points to 72 after the company posted good first quarter results and a director of finance said the company would consider some sort of partnership deal with rival Blockbuster. Movie Gallery's bank debt also moved up two-and-a-half points to 97 1/2.
Movie Gallery posted $116.8 million of EBITDA in the first quarter of 2006, compared to EBITDA of $39.5 million in the same period of 2005. In a release, Joe Malugen, president and ceo, said the video rental industry continues to be challenged, but that recent box office successes are encouraging. In a conference call with analysts, Thomas Johnson, v.p. of finance and development, reportedly said the company would be receptive to discussions with Blockbuster about a partnership or acquisition. He made the comments in response to an analyst's question about whether the company would consider a deal with Blockbuster. A spokesman did not return calls seeking comment.