South Edge trustee eyes approval of $21.4 million post-bankruptcy loan

By Caroline Salls

Pittsburgh, July 11 - South Edge, LLC's Chapter 11 trustee requested court approval of a $21.4 million senior priming secured post-bankruptcy loan from affiliates of the company's settling builders under a trustee financing agreement, according to a Friday filing with the U.S. Bankruptcy Court for the District of Nevada.

The facility will mature on the earliest of the termination of the company's plan support agreement, termination of a trustee consent agreement, the effective date of a plan of reorganization and Nov. 30.

There will be no interest on the loan, unless a default occurs, at which time the interest rate would be Prime rate plus 500 basis points.

The trustee is seeking interim access to $4 million of the financing.

According to the motion, the facility was made possible by a recent settlement between the settling builders, the company's pre-bankruptcy lender agent and its credit agreement lenders.

The trustee said the settlement will be implemented through a plan of reorganization.

The loan is designed to bridge South Edge's estate to a near-term bankruptcy exit.

The interim financing hearing is scheduled for July 20.

South Edge is a joint venture between KB Home wholly owned subsidiary KB Home Nevada Inc. and a third-party property management firm.

An involuntary bankruptcy case was filed against South Edge on Dec. 9, 2010. The Chapter 11 case number is 10-32968.

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