Allied Holdings extends DIP forbearance agreement, negotiates for increased DIP availability

By Caroline Salls

Pittsburgh, April 5 - Allied Holdings, Inc. entered into an extension to its debtor-in-possession credit agreement forbearance agreement with General Electric Capital Corp., Morgan Stanley Senior Funding, Inc., Marathon Structured Financing Fund, LP and GECC Capital Markets Group, Inc., extending the forbearance term until April 18 from April 3.

According to an 8-K filing with the Securities and Exchange Commission, under the terms of the extension, the lenders will be required to advance additional DIP funds to the company as long as it is in compliance with the terms of the DIP and extension agreements.

The extension also requires the fixed-charge coverage ratio for the rolling 12-month period ended Dec. 31 be equal to or less than the applicable ratios specified in the extension and requires the company to file an emergency motion with the U.S. Bankruptcy Court for the Northern District of Georgia to pay fees in connection with the forbearance agreement and extension.

The terms of the extension also require the company to hire a consultant to advise it on various issues regarding the operation of its business.

As a result, the company said it intends to hire Glass & Associates, Inc., subject to bankruptcy court approval.

Allied said it paid the lenders a fee as part of the extension and is required to pay an additional fee 30 days after the extension is executed.

The additional fee will be waived if the company and the lenders enter into a DIP amendment.

In connection with the emergency fee motion, Allied said it does not expect to have sufficient availability to meet its working capital needs as early as the end of May under the present DIP terms.

The company said it is currently negotiating with the DIP lenders on obtaining additional availability to allow it to meet its working capital needs.

Allied, a Decatur, Ga., distributor of new and used vehicles, filed for bankruptcy on Aug. 1, 2005. Its Chapter 11 case number is 05-12515.

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