O'Sullivan given interim access to $35 million DIP facility

New York, Oct. 25 - O'Sullivan Industries Holdings, Inc. obtained interim approval to access its $35 million in debtor-in-possession financing from the U.S. Bankruptcy Court for the Northern District of Georgia.

The company will use the new facility to pay off its pre-bankruptcy credit agreement and to support ongoing operations.

As previously reported, the financing is being provided by CIT Group/Business Credit, Inc. and GoldenTree Asset Management, LP.

The DIP includes a revolving credit facility of up to $30 million, with a $20 million letter-of-credit subline, from CIT. The DIP also will include an up to $5 million term loan from GoldenTree.

The term loan, which essentially will serve as a backstop for the revolver, will be triggered if availability under the revolver is less than $2.6 million or the total amount of loans outstanding under the revolver, undrawn letters of credit, reimbursement obligations under letters of credit on which demand for payment has been made and if the face amount of letters of credit authorized by CIT exceeds $29.5 million.

Interest on the revolver will be Libor plus 400 basis points through April 1. After that, the revolver interest will be based on excess availability.

If the average borrowing availability for a three-month period is $10 million or more, the interest rate will be Libor plus 300 basis points; if the availability is between $7.5 million and $9.99 million, the interest will be Libor plus 350 basis points; if the availability is between $5 million and $7.49 million, the interest will be Libor plus 400 basis points and if the availability is less than $5 million, the interest will be Libor plus 450 basis points.

Interest on the term loan will be Libor plus 850 basis points.

The revolver line-of-credit fee is 50 basis points, and the letter-of-credit fee is Libor plus 25 basis points.

O'Sullivan, a Lamar, Mo., manufacturer of ready-to-assemble furniture, filed for bankruptcy Oct. 14. Its Chapter 11 case number is 05-83076.

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