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The Deal: Oreck Seeks Sale in Chapter 11, Black Diamond Agents $11MM DIP

May 09, 2013, 07:11 AM
Filed Under: Bankruptcy

The Deal Pipeline reports Oreck Corp., which makes and sells vacuum cleaners and air purification products, has filed for bankruptcy protection to pursue the sale of its assets. The Nashville company and eight affiliates submitted Chapter 11 petitions on Monday in the U.S. Bankruptcy Court for the Middle District of Tennessee.

Judge Keith M. Lundin is scheduled on Wednesday to consider first-day motions, including requests for joint administration of the cases and interim use of an $11 million debtor-in-possession loan.

Black Diamond Commercial Finance LLC is the administrative agent for the DIP, which consists of a $6 million revolver from Credit Suisse Loan Funding LLC and a $5 million term loan from GSC Recovery III LP. Oreck will use the loan to repay its prepetition first-lien debt owed to Wells Fargo Bank NA and to fund operations through a sale.

Oreck said it needed the DIP because Wells Fargo sweeps its bank accounts daily, so it has little to no cash to fund its operations and Chapter 11 costs. The company added that it is not generating enough cash to cover expenses.

The DIP would mature on the earliest of the closing of a sale, confirmation of a Chapter 11 plan or nine months from the petition date. It would accrue interest at 12%, which would increase by 3% on default, and would carry a $1 million agent fee, a 1% unused line fee and a $1,000 daily field examination fee.

Under the DIP, Oreck would have to win bidding procedures approval by May 21, conduct an auction by June 5, win sale approval five days thereafter and close the deal 15 days following sale approval.

In its petition, Oreck pegged its assets and liabilities between $10 million and $50 million.

Wells Fargo is the company's primary creditor, from a $20 million first-lien loan extended on Aug. 29. In addition, Oreck also owes $5.5 million on a second-lien loan led by administrative agent Broadpoint Products Corp.

View the entire story on The Deal Pipeline here.

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