Contec Holdings wins access to $20 million interim DIP financing

By Jim Witters

Wilmington, Del., Aug. 31 - Contec Holdings, Ltd. received approval for interim access to $20 million of debtor-in-possession financing during an Aug. 31 hearing in the U.S. Bankruptcy Court for the District of Delaware.

The financing is part of an overall $35 million package that includes a $7.5 million letter of credit.

The court also approved a slate of usual first-day motions in the prepackaged bankruptcy case.

Debtors attorney D. Ross Martin said the company hopes "to be in and out of this case in a little more than a month."

As previously reported, Contec filed a prepackaged bankruptcy plan on Aug. 29 after reaching an agreement with the majority of its senior lender group.

The plan will discharge 100% of the company's subordinated notes obligations. The plan will also convert its senior credit agreement secured obligations into the majority of Contec's equity upon emergence and $27.5 million of new second-lien term notes.

DIP terms

Barclays Bank plc is administrative and collateral agent.

The DIP facility would mature on the earliest of Nov. 30; the date 35 days following the interim DIP order, if no final order is entered; the effective date of the acceptable reorganization plan; or the acceleration of any loans and the termination of the commitment.

The base loan rate is Base plus 8%. The Eurodollar rate is the adjusted Libor plus 9%.

The DIP agreement also called for a final order confirming the plan by Oct. 2 and consummation of the plan by Nov. 30. And Contec requested a Sept. 28 hearing for consideration of the adequacy of its disclosure statement and for confirmation of the plan of reorganization.

However, the U.S. Trustee objected to the tight time frame, since no meeting of creditors has occurred.

With Barclay's consent, the final DIP hearing will be Sept. 24, and the hearing on the disclosure statement and plan confirmation will be Oct. 4.

Contec, a Schenectady, N.Y.-based company that repairs TV set-top broadband boxes for cable companies and box manufacturers, filed its prepackaged bankruptcy on Aug. 29 with the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 12-12437.

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