Portrait Corp. of America obtains court approval of $45 million DIP financing

By Jennifer Lanning Drey

Eugene, Ore., Sept. 28 - Portrait Corp. of America obtained final court approval of its $45 million in debtor-in-possession financing from Wells Fargo Foothill, Inc., according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Under the DIP agreement, $20 million will be available for letters of credit.

As of the bankruptcy filing date, the company owed Wells Fargo $11.25 million under its pre-bankruptcy credit facility, according to a motion previously filed by Portrait Corp.

Under the terms of the DIP facility, the pre-bankruptcy loan will be repaid in full.

Maturity will be the earliest of one year from the bankruptcy filing date, upon the acceleration of the loans after the occurrence of an event of default, the effective date and the effective date of a plan of reorganization.

Interest will be Libor plus 500 basis points.

The letter-of-credit fee will be 500 bps times the undrawn amount of all outstanding letters of credit.

The company will pay a $450,000 closing fee and a $5,000 per month service fee.

The early termination premium is $450,000.

Portrait Corp. of America, a Matthews, N.C.-based portrait studio operator, filed for bankruptcy on Aug. 31. Its Chapter 11 case number is 06-22541.

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