Open Range Communications gets interim approval of $4 million DIP loan

By Jim Witters

Wilmington, Del., Oct. 11 - Open Range Communications, Inc. received interim court approval for $4 million of debtor-in-possession financing from equity sponsor affiliate OEP Open Range Holdings, LLC.

The ruling came during a hearing Oct. 11 in the U.S. Bankruptcy Court for the District of Delaware. The interest rate is 4.6%.

D.J. Baker, attorney for One Equity Partners III, LP, called the loan "probably the most uneconomical DIP in the history of Chapter 11."

He said his clients want to be paid back, and they recognize the need to continue funding Open Range to move the case forward. He said the final order will include priming the Open Range loan from the U.S. Rural Utilities Service.

Although all objections to interim financing were resolved before the hearing, two creditors said they may raise objections at the final DIP hearing.

The final hearing is scheduled for 1 p.m. ET on Dec. 7.

Lloyd Randolph, and attorney for the U.S. Department of Justice representing the Rural Utilities Service, said he may object to the final order for the DIP facility, "particularly to the priming of the RUS loan."

Ronald Gellert, attorney for G4S Technology, LLC, also said he has concerns he will raise at the hearing on the final DIP order, but he did not elaborate.

Debtors attorney Norman L. Pernick said he believes everyone's concerns will be addressed and resolved before the hearing on the final order. He said the DIP lenders are not seeking liens on the RUS funds, which will be moved to a separate escrow account.

The debtors received immediate access to $4 million. But they are working with the lenders to bump the amount of the final DIP facility to $6 million.

Pernick said the additional money is needed to ensure that at least part of the company can be sold as a going concern.

The company hopes to continue to serve about 27,000 remaining customers for its wireless broadband access for three to four months as the case progresses, Pernick said. The company is not accepting new customers and has terminated its sales staff.

"The prospect of flipping the switch and having all those customers go dark was simply not acceptable," Baker said.

If a sale occurs, the company would immediately wind down and seek dismissal or conversion to Chapter 7, he said. There will be no Chapter 11 plan.

If no sale occurs, the company plans to shut down the network and seek dismissal of the case.

Judge Kevin J. Carey also approved first-day motions regarding the company's cash management system, employee compensation, customer care programs, unexpired leases, utility providers and critical vendors.

Pernick said the debtors plan to come back before the court with a key employee incentive plan.

Open Range Communications is a Greenwood Village, Colo.-based broadband company that filed for bankruptcy on Oct. 6. Its Chapter 11 case number is 11-13188.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.