Diamond Glass gains creditor support, court approval for DIP, asset sale bid procedures

By Jennifer Lanning Drey

Portland, Ore., April 24 - Diamond Glass was granted final court approval to borrow $7 million under debtor-in-possession financing provided by Guggenheim Corporate Funding LLC, according to a company news release.

The company also gained court approval for the bidding procedures related to the sale of substantially all of its assets to its secured lender through Guggenheim.

Both approvals came Thursday from the U.S. Bankruptcy Court for the District of Delaware following the settlement of all objections previously raised by the company's official committee of unsecured creditors, according to the release.

"We are extremely pleased to have agreement with our creditors' committee to support our company and our sale process. We have done as well as we could possibly have hoped in assuring the best chances for the company's long-term survival," Bill Cogswell, president of Diamond Glass, said in the release.

DIP details

As previously reported, interest on the Diamond Glass DIP will be Base rate plus 500 basis points.

The DIP facility will mature on the earliest of 90 days, 30 days after the closing date if a final order has not been entered, upon the sale of substantially all of the company's assets and on the effective date of a plan of reorganization.

Guggenheim purchase agreement

Under the Guggenheim purchase agreement, a significant portion of Guggenheim's debt would be exchanged in part for ownership of the business and related assets.

If Guggenheim is the high bidder at an auction scheduled for June 5, the company said it expects the lender agent to carry on Diamond Glass' business.

Under the sale procedures, Guggenheim's stalking horse bid will be equal to a $34 million credit bid, plus assumed liabilities and the amount of outstanding DIP revolver loans.

In addition, Diamond Glass said Guggenheim has agreed to offer up to $25 million in acquisition and working capital financing to any qualified bidder to support its competing bid to purchase the assets.

In exchange for the acquisition funding, the bidder would have to agree to pay cash for the assets at closing, which would be partially funded by the loan proceeds and partially by a cash investment made by the successful bidder.

All bids must include a $1 million deposit.

Initial overbids must be for at least $200,000 more than the cash purchase price. Subsequent bids must be made in increments of at least $100,000.

If Guggenheim is not the high bidder, Diamond Glass will reimburse 2% of its sale-related expenses.

According to the news release, a Diamond Glass attorney told the court Thursday that more than 40 parties had signed paperwork and received preliminary financing and other information related to the bidding.

Diamond Glass is a Kingston, Pa., automotive glass replacement and repair company. Its Chapter 11 case number is 08-10601.

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