South Franklin Circle wins interim access to $1 million DIP facility

By Jim Witters

Wilmington, Del., Oct. 26 - South Franklin Circle won interim access to its $1 million debtor-in-possession financing facility during an Oct. 26 hearing in the U.S. Bankruptcy Court for the Northern District of Ohio, according to debtors attorney Sean D. Malloy.

The DIP facility through Judson Services, Inc. will mature on March 31, 2013 and will not accrue interest.

According to the financing motion, the pre-bankruptcy secured lenders are required to commit that any funding of DIP loans not repaid to Judson will be a credit against any 2013 obligations of Judson under an old credit support agreement.

The court scheduled a final DIP hearing for 2:30 p.m. ET on Nov. 13.

Plan confirmation

Also during the hearing, the company's pre-packaged plan of reorganization was scheduled for a confirmation hearing at 8:30 a.m. ET on Dec. 3.

As previously reported, the plan is based on a restructuring agreement with Hamlin Capital Management, LLC.

The company filed for bankruptcy to implement the restructuring agreement, because its pre-bankruptcy secured lenders did not unanimously support the terms of the deal.

The company said the plan is supported by the requisite majority of pre-bankruptcy secured lenders.

Restructuring plan

To implement the balance sheet restructuring, the company will replace its current $100.6 million of secured debt with $66.75 million in new bond- and term note-secured debt. Of that amount, $17.75 million will be subordinated long-term debt.

The company said it may also borrow up to $550,000 for working capital under the agreement with Hamlin, if necessary.

South Franklin said its senior secured debt will be reduced by more than 50% and its total secured debt by about 40% under the proposed restructuring.

South Franklin Circle, a Chagrin Falls, Ohio-based nonprofit continuing care retirement community, filed for bankruptcy on Oct. 24. The Chapter 11 case number is 12-17804.

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