By Michael Baron, CBS.MarketWatch.com
Aug. 6, 2004
NEW YORK (CBS.MW) -- Shares of Hollywood Entertainment sank Friday after the company cautioned that its plans to go private may not come to fruition.
The video rental chain operator said it was informed by buyout firm Leonard Green & Partners that the financing terms for the deal won't be satisfied because of current industry and market conditions.
Hollywood Entertainment, based in Portland, Ore., said it could provide no assurance that the pact would be completed "on terms that do not differ materially from those in the merger agreement."
In midsession trading on the Nasdaq, Hollywood Entertainment (HLYW: news, chart, profile) saw its stock fall almost 23 percent to $9.86 on volume of 7.96 million shares. Earlier in the session, the shares scraped a 52-week low of $9.60.
The company said its board will consider alternatives to the deal.
On March 29, Hollywood Entertainment said it agreed to be acquired by Leonard Green, a Los Angeles-based investment firm, for $14 per share in cash. At that time, the company said equity financing for the deal was "fully committed" by Leonard Green through Green Equity Partner IV L.P., a $1.85 billion private equity fund, and that the debt financing was to be provided by UBS AG.
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