Kushner-Locke gets further forbearance from bank lenders

New York, Oct. 31 - Kushner-Locke Co. said Wednesday that once again its bank lenders have extended their forbearance agreement, moving the expiry date to 5 p.m. ET on Nov. 21 from 5 p.m. ET on Oct. 31. The Los Angeles-based independent film producer and distributor obtained the initial forbearance agreement in January to give it time to prepare for the sale of its film library and explore restructuring options.

The forbearance continues to be with Chase Manhattan Bank as agent for the lenders. The amendment is the ninth to the credit agreement.

Kushner-Locke, which reported the extension in a filing with the Securities and Exchange Commission, said the latest amendment continues to allow Chase to draw 100% of any amounts above $1.2 million at the end of each week in the company's accounts with certain lenders and put the money towards amounts owing on the credit agreement.

Kushner-Locke previously reported it has hired Houlihan, Lokey, Howard & Zukin, Inc. to advise on the sale of its library and related receivables.

In December 2000, the company reported it was in default under its bank credit agreement. As a result, it said it was prohibited from making payments on its 13¾% convertible subordinated debentures and its 8% convertible subordinated debentures. Both were scheduled to mature in December 2000.

According to an earlier filing, the company obtained its $40 million syndicated revolving credit facility in June 1996 from a group of banks led by Chase Manhattan Bank NA. It was increased to $60 million in September 1997 and to $75 million in December 1998. However the company said the banks have limited the credit available to $68 million.

At the company's option, the interest rate is either:

--LIBOR plus 300 basis points for the portion supported by accounts or contracts receivable, or LIBOR plus 400 basis points for the portion supported by unamortized library film costs or loans under the production tranche.

--the Alternate Base Rate, which is 200 basis points over the greater of Chase's Prime Rate, Chase's Base 30-Day CD Rate plus 100 basis points, or the federal funds effective rate plus 50 basis points.

The revolver carries a 50 basis points commitment fee.

As of June 30, 2000, the company had $1,571,500 principal of Series B 13 ¾% convertible subordinated debentures outstanding and $602,000 principal amount of 8% convertible subordinated debentures outstanding. End

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