Agricultural co-operative Agway has received approval from the bankruptcy court for a $125 million debtor-in-possession facility after filing for Chapter 11 on Oct. 1. The DIP facility is part of Agway's plan to keep the company's operations running effectively, confirmed Karen Ohliger, treasurer. She noted that pre-petition lender GE Commercial Finance leads the DIP line with three other lending banks, Rabobank, CoBank and GMAC Commercial Credit.
The 18-month, $125 million revolver holds a sub-facility of up to $85 million for letters of credit, Ohliger explained. The LIBOR plus 4% pricing remains unchanged from the existing revolver, but there are fewer covenants. "I wouldn't say [the covenants] are relaxed more, there are just fewer of them," she said. Ohliger would not speculate on an exact date when Agway would emerge from bankruptcy, but noted that the restructuring plans are in active discussion, with a credit committee in place. The DIP facility will be used for normal business operations, including vendor and supplier payments. With the approved line, the company received the nod to continue its pre-pay program with farmers and to continue normally scheduled payments and coverage of all employee wages and benefits.