Ritz Camera Centers files bankruptcy, obtains commitment for $85 million DIP loan

By Caroline Salls

Pittsburgh, Feb. 23 - Ritz Camera Centers, Inc. filed for Chapter 11 bankruptcy Sunday in the U.S. Bankruptcy Court for the District of Delaware.

The company said the loss of revenues and profit margins from the diminution of the photo-finishing business is too much of a burden, coupled with the losses of the company's Boater World business, for Ritz to remain profitable under its current structure.

In addition, Ritz said its 2008 holiday sales were significantly lower than the previous year's sales.

In conjunction with the filing, the company has secured a commitment for $85 million in debtor-in-possession financing from Wachovia Bank, NA.

Ritz said the DIP financing is necessary to protect its going-concern value and fund its business and operations while the company completes its restructuring.

The DIP facility will mature on the earliest of Feb. 28, 2010, the effective date of the company's plan of reorganization or liquidation and upon completion of a sale of the company's assets.

Interest will be Prime rate plus 375 basis points for Prime rate loans and Eurodollar plus 400 bps for Eurodollar loans.

Ritz will pay a $1.7 million DIP facility fee, a $1.5 million closing fee and a $5,000-per-month servicing fee.

According to its bankruptcy petition, Ritz has between $100 million and $500 million of both assets and debt.

The company's largest unsecured creditors include:

• Nikon Inc., Melville, N.Y., with a $26.61 million trade debt claim;

• Canon USA Inc., Boston, with a $13.73 million trade debt claim;

• Fuji Photo Film USA Inc., Pittsburgh, with a $4.29 million paper and chemicals claim;

• Epson America Inc., Philadelphia, with a $3.32 million trade debt claim;

• Tocad America Inc., Philadelphia, with a $1.36 million trade debt claim;

• Helgeson Enterprises Inc., White Bear Lake, Minn., with a $1.15 million processing service providers - rebates claim; and

• Vertis Inc., Atlanta, with a $1.01 million newspaper advertising claim.

Ritz is a Beltsville, Md.-based specialty camera and image chain. Its Chapter case number is 09-10617.

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