Mark IV obtains final court approval of $90 million DIP facility

By Rebecca Melvin

New York, May 27 - Mark IV Industries Inc. received court approval of a $90 million debtor-in-possession facility from a group of lenders led by JPMorgan Chase Bank, NA Wednesday at the U.S. Bankruptcy Court for the Southern District of New York.

The final DIP loan and a number of other orders were uncontested and had the support of the official committee of unsecured creditors.

The DIP order wasn't changed significantly from the interim order entered on first-day motions May 1.

Of the $90 million total commitment, $35 million will go to U.S. term loans, $25 million will go toward a Canadian non-debtor foreign commitment and $30 million will go toward an Italian non-debtor foreign commitment.

The facility will mature on May 4, 2010.

Interest on Base rate loans will be Base rate plus 400 basis points. Interest on U.S. and Canadian Eurocurrency term loans will be the Eurocurrency rate plus 500 bps, and interest on Italian term loans will be the Eurocurrency rate plus 350 bps.

The company will pay a $175,000 administration fee, as well as 10% commitment fees on the U.S. and Canadian loans and a 13% commitment fee on the Italian loan.

"It's a very complex lending facility, heavily negotiated and tailored for Mark IV's global enterprise," counsel for the company told the court.

"The fees are more than we wish we had had to pay. We literally did all we could to get different financing, but it was not possible," counsel continued.

One change from the interim order was that the carve out was increased to $5 million from $4 million, counsel said.

In addition, the creditors committee has requested to receive the same financial reporting from the company as the DIP agent.

Cash management order approved

Judge Stuart Bernstein also approved the company's final order for continued use of existing bank accounts and cash management system, which was modified only to satisfy the creditors committee that given the company's complex capital structure and inter company relationships, the committee has the right to maintain the status quo ante, or "unscramble the egg at the end if appropriate," counsel for the unsecured creditors said. The secured lenders did not object.

In addition, the company was granted approval to pay prepetition wages and fund its 2009 incentive plan, but an issue surrounding compensation of severed employees post petition was adjourned until a future hearing.

"We are comfortable that the compensation is not elevating any rights, but just continuing benefits prepetition," counsel for the unsecured creditors committee said.

Also approved were orders allowing the company to pay foreign creditors, shipping obligations, contractors' liens and customer obligations.

Among customer obligations is a rebate program, which is based on annual volume of purchases equivalent to 5% of the price of products, and which totaled $1.7 million in rebates last year.

Mark IV is an Amherst, N.Y., manufacturer of engineered systems and components for the automotive, industrial and transportation markets. It filed for bankruptcy on April 30. Its Chapter 11 case number is 09-12795.

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