Blockbuster granted final approval of $125 million DIP financing

By Caroline Salls

Pittsburgh, Oct. 27 - Blockbuster Inc. received final court approval of its $125 million debtor-in-possession facility from some of its senior noteholders, according to a company news release.

The company said the financing is available to help it meet its obligations to customers, suppliers and employees as it implements its plan of reorganization to recapitalize its balance sheet and substantially reduce debt.

Wilmington Trust FSB is the DIP loan agent.

Interest will be either the Index rate plus 750 basis points or Libor plus 850 bps with a 2% Libor floor.

The facility will mature on the earliest of April 30, 2011, upon occurrence of an event of default or acceleration of the loan, the effective date of a plan of reorganization or liquidation and upon termination of the company's plan-support agreement.

Blockbuster will pay a 1.5% commitment fee, a 2% backstop commitment fee, a $75,000 DIP agent administration fee and a $3,500 DIP agent acceptance fee.

Blockbuster also received court approval to hire legal and restructuring advisers and to pay pre-bankruptcy claims of movie studios and game providers.

"We continue to work diligently with our senior noteholders, the movie studios, the unsecured creditors committee and other key parties on our recapitalization plan, which, when implemented, will strengthen our balance sheet and allow us to continue transforming our business model," chairman and chief executive officer Jim Keyes said in the release.

Blockbuster, a Dallas-based provider of in-home movies and game entertainment, filed for bankruptcy on Sept. 23 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 10-14997.

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