KB Toys gets $350 million DIP from Fleet

By Sara Rosenberg

New York, Jan. 14 - KB Toys Inc. has received a commitment for a $350 million senior secured debtor-in-possession financing facility that conditionally may be converted into post-Chapter 11 financing. Fleet Retail Group Inc. is the lead bank on the DIP.

The facility consists of a $325 million tranche A revolver with a $150 million letter of credit sublimit and a $25 million tranche B revolver, according to company documents.

Interest on the revolver A varies depending on availability. If excess availability is greater than or equal to $75 million, then interest is Libor plus 225 basis points. If availability is greater than or equal to $35 million but less than $75 million, then interest is Libor plus 250 basis points. And, if availability is less than $35 million, then interest is Libor plus 275 basis points.

Interest on the revolver B is set at Libor plus 600 basis points.

The revolver A has an unused fee of 37.5 basis points.

The revolver B has an unused fee of 75 basis points.

Maturity is set for Feb. 23, 2004, however under certain conditions the term may be extended to two years or four years.

The DIP, which is still subject to court approval, will be used for operating expenses, capital expenditures and general corporate purposes.

The Pittsfield, Mass., toy retailer anticipates emerging from Chapter 11 prior to the 2004 holiday season.

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