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American Home seeks $50 million limited recourse DIP facility for loan servicing capital
By Caroline Salls
Pittsburgh, Nov. 13 - American Home Mortgage Investment Corp. requested court approval of a $50 million limited recourse debtor-in-possession facility to allow the company to fund the working capital needs of its loan servicing business until the sale of the business closes in September 2008, according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.
According to the motion, AH Acquisition Mortgage Acquisition Co., Inc., which bought the loan servicing business, will fund the servicing business obligations following the initial sale closing.
However, American Home has granted the buyer a first-priority lien and security interest on the purchased assets, as well as on American Home's cash and cash equivalents and other proceeds received in connection with the servicing business after the initial closing.
As a result, to fund the working capital of the servicing business after the initial closing, AH Acquisition has agreed to provide American Home with $50 million in limited recourse DIP financing.
The DIP financing will replace American Home's use of cash collateral in connection with the servicing business.
American Home said $35 million of the DIP facility will be available on an interim basis.
The DIP financing will mature on the final closing date, scheduled for Sept. 30, 2008.
Interest will be Libor plus 300 basis points.
The minimum borrowing amount under the DIP facility will be $1 million, and borrowings can be made in increments of $100,000 thereafter.
The proceeds of American Home's original DIP facility were not available to fund the loan servicing business operations.
An interim DIP approval hearing is scheduled for Nov. 14.
American Home, a Melville, N.Y.-based real estate investment trust focused on residential mortgage loans, filed for bankruptcy on Aug. 6. Its Chapter 11 case number is 07-11047.
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