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Musicland granted final approval of $75 million DIP
By Caroline Salls
Pittsburgh, Feb. 21 - Musicland Holding Corp. obtained final court approval of its up to $75 million in debtor-in-possession financing from Wachovia Bank, NA, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.
Proceeds from the DIP will be used for general operating and working capital purposes.
According to the motion, the company wants to convert its pre-bankruptcy loan agreement with Wachovia into the DIP facility. The company has $38.1 million outstanding under the pre-bankruptcy facility.
Maturity will be the earliest of one year or upon confirmation of a plan of reorganization.
Interest on Prime rate loans will be Prime rate plus 25 basis points. Interest on eurodollar rate loans will be Libor plus 325 bps.
The borrowing minimum is $2.5 million.
Musicland must pay a $750,000 DIP facility fee. The unused portion fee is 50 bps, and the letter-of-credit fee is 375 bps.
Musicland, a Minnetonka, Minn., specialty retailer of pre-recorded entertainment software products, filed for bankruptcy on Jan. 12. The company's Chapter 11 case number is 06-10064.
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