Ed Garden's former directorial chair is still warm, and already the company is rumored to be making advance preparations for a bankruptcy. According to Debtwire, the company is negotiating a DIP financing with existing revolver agent Citigroup (unfortunately most of Citi's DIP arranging bankers have recently departed the company). The likely DIP will total about $400 million, consisting of $100 million in new cash, and two separate roll ups, one of the $150 million AR facility, and another of the pre-petition revolver. Pricing talk on the DIP is at Libor + 650 (surprisingly, higher than where Sears' new L+400 credit facility is expected to price) with a 300 bps Libor floor.
Debtwire also reports that bondholders, who have no desire to be further primed, are happy to take Citi's role as DIP providers. Bondholders are also furious that as part of amendment negotiations in December, Citi received inventory collateral, thereby further minimizing their recoveries in chapter. Lastly, the filing, which can come any minute, has put asset sales on hold as bondholder asset pools would be even further diluted raising the spectre of some serious litigation.
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