Scotia Pacific DIP loan negotiation expense payment approved

By Caroline Salls

Pittsburgh, May 29 - Scotia Pacific Co. LLC obtained court approval to pay $150,000 of Lehman Commercial Paper Inc.'s expenses incurred in negotiations for a proposed $20 million debtor-in-possession facility, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

Scotia Pacific said the $150,000 is part of a $500,000 total work fee to be paid to Lehman.

According to the motion, Scotia Pacific cannot access the full amount available to it under a cash collateral stipulation because only $2.5 million of the cash collateral reserve account is presently liquid, while the balance of the account is invested in auction-rate securities.

As a result, Scotia Pacific said Lehman has offered to extend $20 million in DIP financing to ensure the company has enough liquidity to take it through the conclusion of its Chapter 11 bankruptcy case.

Interest on the proposed DIP facility will be 8.5%.

The facility would mature on the earliest of six months from closing, upon a sale of substantially all company assets, upon conversion of the company's Chapter 11 case and on the effective date of a plan of reorganization.

Scotia Pacific and Pacific Lumber, a Scotia, Calif.-based producer of redwood lumber and an indirect wholly owned subsidiary of Maxxam Inc., filed for bankruptcy on Jan. 18, 2007. The Chapter 11 case number is 07-20027.

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