Orleans Homebuilders interim DIP loan, first-day motions approved

By Caroline Salls

Pittsburgh, March 5 - Orleans Homebuilders, Inc. has received court approval of several key first-day motions, including interim access to up to $26 million of the company's debtor-in-possession financing, according to a news release.

The final DIP facility hearing is scheduled for April 6.

The interim DIP loan includes up to $11 million in cash funding and up to $15 million of letters of credit and will be used to finance Orleans' business expenses.

As previously reported, the DIP facility consists of a $40 million revolving credit facility and an $80 million term loan. The term loan will be rolled up from the company's pre-bankruptcy debt.

Tranche 1 of the term loan would be a $40 million tranche, consisting of a roll-up of each pre-bankruptcy lender's share of outstanding pre-bankruptcy debt. Tranche 2 would be a $40 million tranche, consisting of a dollar-for-dollar roll-up of each DIP revolving lender's pre-bankruptcy debt.

The facility will mature on the earliest of 12 months from the bankruptcy filing date, the effective date of a plan of reorganization and conversion of the company's Chapter 11 case.

Interest on the revolver will be Libor plus 850 basis points with a 2% Libor floor, and interest on the term loan will be Libor plus 350 bps with a 2% Libor floor.

In addition, the company received court approval to pay pre-bankruptcy employee wage and benefit charges, as well as to maintain its existing cash management systems and use its cash collateral.

The court also approved motions for the continuation of Orleans' Mortgage Plus Program and home warranty program and payment of amounts owed to homeowners' and condo associations before the bankruptcy filing.

Additionally, the court approved a motion to honor pre-bankruptcy claims for critical vendors.

Orleans Homebuilders, a Bensalem, Pa.-based developer, builder and marketer of single-family homes, townhouses and condominiums, filed for bankruptcy on March 1 in the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 case number is 10-10684.

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