Smart Papers obtains interim court approval of financing agreement with Plainfield

By Jennifer Lanning Drey

Eugene. Ore., Sept. 1 - Smart Papers, LLC obtained interim court approval of a financing agreement with Plainfield Special Situations Master Fund Ltd., according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

Plainfield has purchased $27.91 million principal amount of the company's Wachovia debt, plus interest under the term sheet for Smart Papers' plan of reorganization. Plainfield is the sponsor for the plan.

Within five days after the company's loans and any Wachovia claims are transferred to Plainfield, Plainfield will make $5 million available to the company in accordance with its final DIP order.

Following approval, Smart Papers will pay Plainfield the $160,000 remaining of its $460,000 closing fee.

Maturity on the supplemental loans will be the earliest of the occurrence of an event of default, upon termination of the plan term sheet or Dec. 31.

Interest on the supplemental loans will be Prime rate plus 300 basis points, and Smart Papers will have the option to pay interest at Prime rate plus 150 bps and defer payment on the remaining interest, provided that all deferred interest payments will be due on the supplemental loan termination date.

Plainfield has also agreed to make an additional $7.3 million in tranche B revolving loans available to the company.

The tranche B revolvers will be made in $100,000 increments and will carry the same interest and maturity as the supplemental loans.

A hearing has been scheduled for Sept. 28.

Smart Papers, a Hamilton, Ohio-based paper manufacturer, supplier and marketer, filed for bankruptcy on March 21. Its Chapter 11 case number is 06-10269.

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