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HMY RoomStore plan of reorganization confirmed
By Caroline Salls
Pittsburgh, May 18 - HMY Roomstore, Inc.'s plan of reorganization was confirmed Wednesday by the U.S. Bankruptcy Court for the Eastern District of Virginia.
HMY Roomstore will emerge from Chapter 11 as the reorganized business while parent Heilig-Meyers will be liquidated.
Under Roomstore's plan, the company will obtain a new asset-based revolving credit facility and may issue junk bonds to fund the reorganization and its operations after emerging from Chapter 11.
Unsecured creditors of Roomstore, with an estimated $27.4 million of claims, and Heilig-Meyers, with an estimated $57.9 million claim, will receive all the common stock of RoomStore, subject to dilution by a management incentive plan.
Heilig-Meyers previously filed its own reorganization plan with the U.S. Bankruptcy Court for the Eastern District of Virginia. Under the plan, creditors of the parent company will receive interests in a liquidation trust.
HMY Roomstore has a commitment for a $35 million exit facility via Bank of America Retail Finance.
The facility will be a $35 million five-year revolver, but the company will have the option to start with a $30 million facility and subsequently increase it to $35 million. Letters of credit will be limited to $15 million.
Interest will be at Libor plus 150 basis points, and there will be a 25 basis point unused line fee.
HMY Roomstore will be able to use the facility for general corporate purposes.
HMY Roomstore's disclosure statement was approved on March 10.
HMY Roomstore is a Richmond, Va.-based home furnishing retailer that will emerge as the surviving company from Heilig-Meyers Co.'s Chapter 11 case. Heilig-Meyers will be liquidated.
Heilig-Meyers filed for bankruptcy on Aug. 16, 2000 with the U.S. Bankruptcy Court for the Eastern District of Virginia. Its Chapter 11 case number is 00-34533.
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