Tower Records granted interim approval of $85 million DIP facility

By Caroline Salls

Pittsburgh, Aug. 22 - Tower Records obtained interim court approval of its $85 million debtor-in-possession financing facility, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The DIP facility includes $10 million for tranche B loans, a $5 million sublimit for letters of credit and a $4.24 million real estate sublimit.

Maturity is Dec. 31.

Interest on the revolving loans will be Prime rate plus 50 basis points. Interest on real estate loans will be 9.5% and interest on tranche B loans will be Prime rate plus 450 bps.

The DIP facility will be used to fund the company's operations and purchases of new products while it completes its asset sale.

The final DIP hearing is scheduled for Sept. 15.

Tower is a subsidiary of Sacramento, Calif.-based MTS Inc. The company filed for bankruptcy on Sunday. Its Chapter 11 case number is 06-10886.

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