GE Commercial Finance, Bank of America and Fleet Retail Finance are pitching Kmart's $2 billion exit financing deal to managing agents this Thursday. The credit resembles the bankrupt company's existing debtor-in-possession facility, said a banker familiar with the facility. The package includes a $1.8 billion revolver and a $200 million "B" loan priced at LIBOR plus 3 1/2%, he added. The deal is secured by inventory and would be subject to the company's satisfaction of customary closing conditions. The credit will be used for ongoing capital needs when the mass merchandising retail company emerges from Chapter 11, targeted for the end of next month. A B of A official declined to comment, while Fleet and GE bankers did not return calls.
The bankruptcy court approved the exit loan last January, along with an amendment on the existing DIP that permitted additional Kmart store closings and changes to soften an EBITDA covenant. On Feb. 26, the court further authorized Kmart to begin soliciting approval from its creditors for its amended reorganization plan, keeping the company on its "fast-track" emergence schedule. The company declared bankruptcy on Jan. 22 of 2002. J.P. Morgan has led past credits for Kmart and is a lead bank on the existing DIP, but the bank is not involved in the exit deal. Calls to J.P. Morgan officials were not returned. Calls to a Kmart restructuring officer were referred to a spokesman that referred inquiries to public documents.