Oglebay Norton's ad hoc noteholders committee opposes $75 million DIP financing

By Jeff Pines

Washington, March 11 - Oglebay Norton Co. does not need a $75 million debtor-in-possession financing, said the ad hoc committee of senior secured noteholders.

In a motion objecting to the financing, the ad hoc committee said the company will have to pay $2 million in fees for nine months of financing because of the size of the facility. None of the materials provided by Oglebay Norton to the court so far have indicated to the committee's members that the company needs a facility of this size, it said in the filing filed March 10.

The committee, which said some of its members began working informally with the company on a restructuring several months ago, does not oppose the company getting debtor-in-possession financing, but it believes this proposed facility will profit the lenders and the pre-petition lenders as well "at the expense of other creditors."

"It appears evident that the debtors have been handcuffed by the pre-petition secured lenders - they are left with no choice but to accept a less attractive proposal at the hands of the DIP lenders/pre-petition secured lenders," the committee said.

Another concern is that the company has not been forthcoming with information it needs and the terms of the facility do not require the company or the lenders to share any financial information, the committee said. A particular issue is that the lenders were provided with a 13-week budget, which it was not given.

The post-petition financing is being provided through Silver Point Finance LLC and General Electric Capital Corp.

The members of the ad hoc committee include: The 1818 Mezzanine Fund II, LP; Short Vincent Partners, LP; SVP Advisors, LLC; Robert Kanner Deferred Compensation Trust; Restoration Holdings, Ltd.; Sankaty High Yield Partners II, LP; Sankaty High Yield Partners III, LP; Brant Point CBO 1999-1, Ltd.; Great Point CBO 1998-1 Ltd.; Great Point CLO 1999-1 Ltd.; Race Point CLO, Ltd; Sankaty Credit Opportunities, LP; and Smith Corona Corp.

Oglebay Norton, a Cleveland-based industrial minerals and aggregates company, filed for Chapter 11 on Feb. 23. Its Chapter 11 case number is 04-10558.

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