A bankruptcy court Judge has approved a USD 125 million replacement debtor-in-possession loan for Anchor Glass Container Corp.
Judge Alexander Paskay of the US Bankruptcy Court for the Middle Distric…
A bankruptcy court Judge has approved a USD 125 million replacement debtor-in-possession loan for Anchor Glass Container Corp. Judge Alexander Paskay of the US Bankruptcy Court for the Middle District of Florida in Tampa approved the DIP on a final basis at a hearing on Thursday, 8 September 2005, said Samuel Stricklin, counsel to the unsecured creditors committee at Bracewell & Giuliani LLP in Dallas. The committee had objected to the DIP, which is being provided by a consortium of Anchor noteholders. The committee claimed in court papers that the loan gave the noteholders, which are “insiders and current creditors” of Anchor, too much control in the bankruptcy case. The committee also questioned Anchor“s efforts to find DIP financing from other sources. According to Stricklin, though, several agreements were integrated into the DIP to clear the problems. “The issues regarding control of the case were worked out,” Stricklin said. “The noteholders won“t have veto power over a plan.” He added that “a dozen or so” more points were added into the final order. Tampa-based Anchor turned to its noteholders for the DIP after a USD 130 – 140 million and USD 140 million DIP from pre-petition lenders Wachovia Capital Finance Corp. and Madeleine LLC came to nothing when Madeleine withdrew from the deal. Wachovia then reduced its commitment to USD 115 million and that DIP gained interim approval on 8 August 2005, the day that Anchor made its third bankruptcy filing in 10 years. Anchor then went to a group of its 11% senior noteholders, led by Wells Fargo Bank NA, and obtained a USD 15 million supplemental DIP to serve as bridge financing while the parties negotiated a larger loan that would take out the Wachovia DIP and repay about USD 79 million in pre-petition debt owed to both Wachovia and Madeleine. The result was the USD 125 million DIP, which is priced at LIBOR plus 700 basis points, although the rate increases by 200 basis points should Anchor default. The loan matures a year after the closing date of 8 September 2005. That loan carries a commitment fee equal to 87.5 basis points, or 0.875%, of the principal amount, and a prepayment fee of 100 basis points, or 1%, should Anchor refinance with a replacement DIP. It also contains a USD 2 million carve-out. Anchor Glass, the third-largest maker of glass containers in the U.S., provides containers to beer and other beverage producers. Its previous bankruptcy filings were on 15 April 2002 and 13 September 1996.