First Magnus Financial seeks approval of $15 million DIP

By Caroline Salls

Pittsburgh, Sept. 4 - First Magnus Financial Corp. has obtained a commitment for $15 million in debtor-in-possession financing from Wells Fargo Business Credit and Summit Investment Management, LLC, according to a Friday filing with the U.S. Bankruptcy Court for the District of Arizona.

The DIP is subject to bankruptcy court approval, and the hearing for interim access to $5 million of the DIP is scheduled for Thursday.

Proceeds of the revolving credit facility will be used to fund working capital for the company's liquidation.

The DIP will mature on the earliest of one year from closing, closing of a sale of substantially all company assets, confirmation of a plan of reorganization, conversion or dismissal of the company's Chapter 11 case, appointment of a trustee or examiner and occurrence of an event of default.

Interest will be Prime rate plus 1,000 basis points, and the interest will increase by 300 bps if the company defaults on the DIP.

As previously reported, the wind down of the company should cost First Magnus $12 million to $13 million, and it is expected to provide a roughly $26 million net recovery for creditors.

First Magnus, a Tucson, Ariz., mortgage loan originator, filed for bankruptcy on Aug. 21. Its Chapter 11 case number is 07-10578.

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