Silicon Graphics interim DIP approval extended to June 20

By Caroline Salls

Pittsburgh, June 1 - Silicon Graphics, Inc.'s interim court approval to use up to $28 million of its proposed $70 million debtor-in-possession term loan financing was extended to June 20, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The lenders are senior secured noteholders Quadrangle Master Funding, Ltd., Watershed Technology Holding, LLC and Encore Fund, LP.

Proceeds from the financing, together with cash generated from daily operations and cash on hand, will be used to pay down a $20 million portion of Silicon Graphics' pre-bankruptcy debt and to fund operating expenses, including post-bankruptcy supplier payments, employee wages and benefits, and other operating expenses.

The term will be the earliest of 180 days; the effective date of a plan of reorganization agreed to by the DIP lenders; upon an event of default; upon the sale or liquidation of substantially all of the company's assets or upon prepayment of the facility.

Interest will be the greater of Prime rate plus 700 basis points or 250 bps above the highest rate to be paid in cash in effect from the credit agreement commencement date.

Advances will be available under the DIP, including $10 million on the closing date, $5 million on May 12, $5 million on May 19, $3 million on May 26, $32 million on the entry of the final DIP order, $10 million on June 30 and the balance on July 14.

Silicon Graphics will pay a 75 bps commitment fee.

The final hearing on this DIP facility is scheduled for June 20.

On Friday, the company also requested court approval of a new $130 million permanent DIP facility.

Silicon Graphics, a Mountain View, Calif., technology provider, filed for bankruptcy on May 29. The company's Chapter 11 case number is 06-10977.

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