NEW YORK (The Deal) -- Pizza chain Sbarro has won interim approval to use cash collateral and $20 million in debtor-in-possession financing as it aims to confirm a prepackaged reorganization plan.
Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan on Wednesday, March 12, issued an order approving the financing motion and set a final cash and DIP hearing for April 7. Glenn also scheduled an April 25 combined hearing to consider approval of the company's disclosure statement and confirmation of the plan.
Lenders holding 98% of the company's debt voted in favor of the plan, and certain lenders are providing the DIP, which would mature on the earliest of six months from the closing date, on consummation of a sale, on the effective date of a plan or 35 days following the interim order if there were no final order. The debtor would have the option, for a 0.75% fee, to extend the term of the DIP three months.
The financing accrues interest at either Libor plus 8%, with a Libor floor of 2%, or a base rate plus 7%, with a floor of 3%. It carries a 1.5% underwriting fee and a 2% original issue discount.
The Melville, N.Y., debtor filed for Chapter 11 on Monday, calling its debt "unsustainable."
Under the plan, first-out term lenders owed $61.3 million on a Nov. 28, 2011, credit agreement would credit-bid $35 million for substantially all the company's equity. Second-out term lenders owed $86.9 million would receive 2% of shares.