Hancock Fabrics obtains approval for DIP financing

By Michelle Anderson

Rochester, N.H., April 19 - Hancock Fabrics, Inc. obtained approval for its $105 million debtor-in-possession financing Thursday, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

The order upheld the March 22 court approval to use on an interim basis up to $10 million of its $105 million debtor-in-possession facility from Wachovia Bank, NA.

DIP proceeds will be used for general operating and working capital purposes. Interest will be Libor plus 175 basis points or prime plus 25 bps, at the company's option.

The DIP will mature on the earlier of March 22, 2009 and upon confirmation of a plan of reorganization.

As previously reported, the company will pay up to $300,000 in servicing, unused line, audit and appraisal fees and up to $200,000 in consulting fees.

Hancock Fabrics is a Baldwyn, Miss.,-based specialty retailer of fabric and related home sewing and decorating accessories. It filed for bankruptcy on March 21. Its Chapter 11 case number is 07-10353.

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