Kmart opts not to seek increase in size of DIP facility

By Sara Rosenberg

New York, Aug. 23 - Kmart Corp. announced that it will not seek approval to increase the size of its $2 billion debtor-in-possession financing facility. The company continued to say that liquidity will be sufficient during the peak borrowing period with an expected $1.1 billion of cash and available credit.

Earlier this month, the Troy, Mich. merchandising company announced that it wanted to increase its DIP by up to $500 million in order to provide additional confidence to suppliers and the factoring community.

"However, following an assessment of current conditions in the retail financing market after review with the three statutory committees in the company's reorganization case, Kmart has determined that the expansion of the DIP facility is unnecessary and unwarranted," a news release said.

The company is currently negotiating an amendment to the DIP agreement that would adjust the cumulative earnings before EBITDA covenant over specified periods of time. Approval of the amendment is expected this month, according to the release.

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