Propex creditors committee objects to $65 million replacement DIP; hearing postponed

By Jennifer Lanning Drey

Portland, Ore., Jan. 22 - Propex Inc.'s official committee of unsecured creditors objected to the company's motion for approval of a $65 million debtor-in-possession facility to replace its current facility, according to a Wednesday filing with the U.S. Bankruptcy Court for the Eastern District of Tennessee.

The creditors said the financing cannot be approved by the court because it dictates the terms of the company's reorganization through a forced liquidation.

The committee believes the DIP facility is designed to allow Propex's secured lenders to purchase the company's assets at a low price by forcing an expedited sale.

The committee also noted it was only given three days to analyze the terms of the financing, which it did not feel was adequate.

Accordingly, the hearing for approval of the DIP facility was continued to Jan. 28 from Jan. 22.

As previously reported, the proposed new DIP lender is Wayzata Investment Partners LLC.

Propex's current DIP facility expires on Jan. 23, and the company's current DIP financing lenders have declined to renew that facility.

Propex said the terms of the Wayzata facility are "substantially similar" to the current facility.

Propex is an Atlanta-based producer of primary and secondary carpet backing and is a manufacturer and marketer of polypropylene synthetic fabrics used in other industrial applications.

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