RoomStore eyes approval of amended $15 million DIP facility from Salus

By Caroline Salls

Pittsburgh, Jan. 30 - RoomStore, Inc. requested court approval to amend its debtor-in-possession facility to replace the lender, increase the loan amount and extend the maturity date, according to a Friday filing with the U.S. Bankruptcy Court for the Eastern District of Virginia.

The company said the change in DIP lender has been planned since the outset of its bankruptcy case.

Under the amended facility, Salus Capital Partners, LLC will replace Wells Fargo Bank, NA as agent and sole lender.

The maximum facility size will be increased to $15 million from $14 million, and the maturity date will be extended to June 12, 2013 from Dec. 31, 2012.

In addition, RoomStore said the interest rate applicable to advances against pledged equity components added to the borrowing base is 13% until 90 days after entry of the supplemental order, subject to reduction after that based on an availability grid.

According to the motion, the amended borrowing base formula provides substantial incremental liquidity, including up to $3 million of borrowing availability on specified pledged equity and increased advance rates on eligible inventory and real estate.

The interest rate applicable to all other advances is equal to the JPMorgan Chase Prime rate plus 300 basis points, which the company said is identical to the previously applicable interest rate.

The minimum excess availability that the company is required to maintain at any time will also be reduced to $750,000 from $1 million, and the permitted variance in inventory receipts will be increased to 20% from 10%.

Richmond, Va.-based home furnishing retailer RoomStore emerged in 2005 as the surviving company from Heilig-Meyers Co.'s Chapter 11 case. The company filed for bankruptcy on Dec. 12. The Chapter 11 case number is 11-37790.

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