Tanner & Haley granted court OK to enter commitment letter for $80 million replacement DIP facility

By Jennifer Lanning Drey

Portland, Ore., Oct. 11 - Tanner &Haley Resorts obtained court approval to enter into a commitment letter for up to $80 million of replacement debtor-in-possession financing from Ableco Finance LLC, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Connecticut.

The company filed a motion for approval of the DIP financing Wednesday.

The replacement DIP facility will include a $50 million term loan and a $30 million revolving credit facility.

Proceeds will be used to refinance the company's $74 million in secured credit facilities and for working capital and general corporate purposes.

Maturity will be the earliest of 18 months or upon consummation of a plan of reorganization.

Interest will be the JPMorgan Chase Bank reference rate plus 475 basis points or Libor plus 775 bps, at the company's option.

Tanner & Haley will be required to pay an $800,000 commitment fee, an $800,000 closing fee, a 50 bps unused line fee, a servicing fee of $50,000 per quarter and a $1,500 per day field examination fee.

If the maturity date occurs more than six months after the closing date, the closing fee will increase to $1.2 million, according to the filing.

As previously reported, on Aug. 17, the company obtained final court approval for $12.2 million in DIP financing from Patriot Group, LLC and LLP Mortgage, Ltd., of which $10.4 million is still owed.

The existing DIP agreement expires on Oct. 31, and if the company is unable to obtain replacement financing by then, it said it may not have sufficient liquidity to continue to operate pending an exit from bankruptcy.

In addition, the DIP order requires that Tanner & Haley obtain replacement financing by Oct. 31 that will be sufficient to "take out" Patriot and LPP and give Patriot and LPP the right to foreclose on the company's assets if it fails to do so.

Tanner & Haley, based in Westport, Conn., is a hospitality and real estate company. It filed for Chapter 11 on July 23. Its case number is 06-50245.

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