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Mervyns granted final court approval for $465 million DIP facility
By Jennifer Lanning Drey
Portland, Ore., Aug. 26 - Mervyns obtained final court approval for its $465 million debtor-in-possession financing facility Tuesday from the U.S. Bankruptcy Court for the District of Delaware, according to a company news release.
The financing was approved with the support of the company's official committee of unsecured creditors after all objections were either resolved or withdrawn, according to the release.
The DIP facility is being provided by a group of lenders led by Wachovia Capital Finance Corp. (Western) as agent.
The company said the DIP facility will be used in combination with cash generated from operations to continue to pay vendors and employees, as well as to provide operational and financial stability as Mervyns proceeds with its restructuring.
"Our DIP financing provides Mervyns with the liquidity and stability it needs to continue serving our customers and meeting our obligations to our vendors," John Goodman, chief executive officer of Mervyns, said in the release.
"With this final DIP financing in place and our financial position now strengthened, we are able to maintain our operations while continuing discussions with our creditors as we focus on emerging from bankruptcy."
DIP terms
As previously reported, the DIP facility includes a revolving credit facility with a $125 million sublimit on letters of credit.
Interest on the revolving loan A is the adjusted Eurodollar rate plus 350 basis points or Prime rate plus 200 bps, at Mervyns' choice.
Interest on the revolving loan B is the adjusted Eurodollar rate plus 450 bps.
The DIP facility will mature on the earlier of Dec. 31, 2009 and the effective date of a plan of reorganization or liquidation.
Mervyns, a San Francisco-based department store, filed for bankruptcy on July 29. Its Chapter 11 case number is 08-11586.
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