The Spiegel Group announced that it has received final Bankruptcy Court approval for the full amount of its $400 million senior secured debtor-in- possession (DIP) financing facility. A consortium of banks, led by Bank of America, N.A., Fleet Retail Finance Inc. and The CIT Group/Business Credit, Inc., will provide the DIP financing facility. Banc of America Securities LLC arranged this financing.
The DIP facility is an asset-based facility, with loan availability tied to a borrowing base test measured by the value of the company’s inventory, receivables and other collateral on a regular basis. $50 million of the DIP facility is specifically available to fund receivables generated under the consumer credit cards issued directly by the company’s merchant divisions. Under the terms of the agreement, this $50 million expires upon either the company’s termination of the $50 million financing or 120 days after the date of the final order, whichever occurs first. Upon such termination, the amount available under the DIP facility will be reduced to $350 million.
The DIP facility will supplement the company’s cash flow from operations to fund its operations, including the purchase of goods and services, during the restructuring period. The company continues to believe that this financing, together with its current cash reserves and cash flow from its operations, will be sufficient to fund its operations during the reorganization process. As previously announced on March 17, 2003, the Court approved $150 million of interim financing under this facility.
“The Court’s final approval of our DIP financing is another important step forward as we continue our efforts to restore the financial health of our business,” stated Bill Kosturos, interim chief executive officer and chief restructuring officer of The Spiegel Group. “This financing facility enables The Spiegel Group to continue to operate smoothly throughout the reorganization process.”
