Raser Technologies: final court approval of $8.75 million DIP loan could stall on objection

By Lisa Kerner

Charlotte, N.C., May 16 - Merrill Lynch, Pierce, Fenner & Smith Inc. filed an objection to Raser Technologies, Inc.'s motion for an entry requesting final court approval of an $8.75 million debtor-in-possession facility, according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.

The final hearing is May 19.

"Through the financing motion, the debtors seek relief far beyond that which is necessary to secure funding to continue operating and to protect the estates from losing value," the filing said.

Also, Merrill Lynch, Pierce, Fenner & Smith claims in the filing that "...any deviation from the sale procedures or plan of reorganization envisioned by the DIP lenders could result in a breach of a condition or an event of default under the DIP facility that would result in automatic relief to the DIP lenders that would likely cripple the debtors going forward and end any hope of a successful resolution to these cases."

DIP loan details

As previously reported, Raser is seeking approval of the DIP financing to fund its working capital needs during its bankruptcy proceedings.

The facility will mature on the earliest of May 20 if the final order has not been entered by 11:59 p.m. ET on that date; Aug. 11 if the company's plan of reorganization has not been confirmed by 11:59 p.m. ET on that date; the effective date of a plan of reorganization and the Aug. 26 final maturity date.

Wilmington Trust Co. is the administrative agent.

Interest will be 15%.

The company was granted interim access to $750,000 of the DIP loan on May 3.

Provo, Utah-based Raser is a technology licensing and development company focused on geothermal power generation. The company filed for bankruptcy on April 29, and its Chapter 11 case number is 11-11315.

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