Circuit City files Chapter 11 bankruptcy, secures $1.1 billion in DIP financing

By Caroline Salls

Pittsburgh, Nov. 10 - Circuit City Stores, Inc. filed for Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the Eastern District of Virginia, one week after the company announced plans to close 155 underperforming stores due to its deteriorating liquidity and the continued weak macroeconomic environment.

In connection with the bankruptcy filing, the company has obtained a commitment for $1.1 billion in debtor-in-possession financing from Bank of America NA, GE Capital Markets, Inc. and Wells Fargo Retail Finance, LLC.

The DIP facility includes a $350 million sublimit for letters of credit.

Proceeds will be used to repay pre-bankruptcy debt, to finance the acquisition of working capital assets and to finance capital expenditures.

The facility will mature one year from closing, 45 days after interim approval if final approval has not been granted and on the effective date of a plan of reorganization.

Interest will be Libor plus 400 basis points.

According to court documents, Circuit City has $3.4 billion of total assets and $2.323 billion in debt.

The company's largest unsecured creditors include:

• Hewlett Packard, Houston, with a $118.8 million trade claim;

• Samsung Electronics Amer Inc., Ridgefield Park, N.J., with a $115.93 million trade claim;

• Sony Computer Entertainment, Foster City, Calif., with a $60.01 million trade claim;

• Zenith Electronics Corp., Englewood Cliffs, N.J., with a $41.16 million trade claim;

• Toshiba America Business Solutions Inc., Irvine, Calif., with a $17.92 million trade claim;

• Alliance Entertainment, Coral Springs, Fla., with a $15.8 million trade claim;

• Garmin International Inc., Olathe, Kan., with a $15.44 million trade claim;

• Olympus Corp., Center Valley, Pa., with a $15.1 million trade claim;

• Nikon Inc., Melville, N.Y., with a $14.93 million trade claim; and

• Paramount Home Video, Hollywood, Calif., with a $13.76 million trade claim.

Circuit City is a Richmond, Va., electronics retailer. Its Chapter 11 case number is 08-35653.

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