The terms of the reorganization agreement must be approved bythe bankruptcy court. The plan calls for conversion of $325 millionof Movie Gallery's 11% senior notes into new equity and another$175 million of second-lien debt, now held by Sopris, to also beconverted into new equity. In addition, Sopris has committed tobackstop a $50-million equity rights offering available to alleligible holders of the 11% senior notes.

Movie Gallery estimates that holders of its common equity wouldget a 2%-share of the total equity interest of the newly organizedcompany. Existing shares of common stock, which traded under MOVIon the Nasdaq, will be canceled. This year alone, the stock fellfrom a 52-week high of $5.29 a share to $0.21 a share.

Under the plan, the company's indebtedness of approximately $1billion would be reduced by about $400 million, according to aprinted statement from the locally based Movie Gallery. Thesavings, according to the statement, would significantly reduceinterest expense and improve cash flow. The $600 million offirst-lien debt would remain in place, but be restructured underagreement with Sopris and the lenders.