Tweeter granted interim approval of $10 million junior DIP; final hearing July 13

By Caroline Salls

Pittsburgh, June 27 - Tweeter Home Entertainment Group, Inc. obtained court approval to use its up to $10 million junior debtor-in-possession term loan on an interim basis, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The junior DIP lender is Schultze Agency Services, LLC.

The final hearing is scheduled for July 13.

Despite the liquidity provided by its initial DIP facility, Tweeter said it does "not have sufficient availability to survive beyond a mere four weeks from the petition date."

In addition, the company said it has suffered greater-than-expected decreasing revenue in the post-bankruptcy period and has been unable to buy enough inventory for sale in its retail stores.

The company said it has been unable to restore vendor and customer confidence and secure some trade terms, and vendors and suppliers are requiring cash in advance.

The junior DIP facility will mature on the earliest of Jan. 11, 2008, the effective date of a plan of reorganization and upon the closing of a sale of substantially all company assets.

Interest will be Libor plus 475 basis points.

The company will pay a $100,000 fee to the agent on the closing date.

Tweeter, a Canton, Mass., consumer electronics retailer, filed for bankruptcy on June 11. Its Chapter 11 case number is 07-10787.

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