Final DIP Financing Approved for Kid Brands, Inc.

The US Bankruptcy Court gave an order to Kid Brands, Inc. to obtain DIP financing on a final basis on January 16, 2015. As per the order, the debtor has been authorized to obtain a revolving credit facility in the amount of $49 million from DIP Lenders, Sterling National Bank, with Salus Capital Partners, LLC acting as the administrative agent. The DIP facility shall include Tranche A revolver of $27 million and Tranche A-1 revolver of $22 million.

The DIP loan would carry an interest rate of LIBOR plus 10% p.a., with respect to Tranche A Loans and an interest rate of LIBOR plus 15% p.a., with respect to Tranche A-1, along with an additional 3.5% p.a. interest in the event of default. As per the terms of the DIP agreement, the loan carries a commitment fee of 0.5% times the average daily amount by which Tranche A and Tranche A-1 commitments exceed the outstanding amount of Tranche A loans and Tranche A-1 loans, respectively. The collateral monitoring fee will be of $0.03 million per month paid on the closing date.

The DIP exit fee will be 2.5% of the aggregate commitments as of closing date or $1.23 million payable on the earliest to occur of a sale of substantially all of the assets, confirmation of Chapter 11 plan or termination date. The DIP facility would mature either on June 15, 2015. Adequate protection would be provided to the DIP lenders in the form of super-priority administrative expense claims which is subject to a carve-out of $0.4 million towards unpaid professional fees / administrative expenses and first priority lien upon and security interest in the debtor's collateral.

The borrowings under the DIP facility shall be used to repay indebtedness owed in connection with the pre-petition credit agreement, to finance the acquisition of working capital assets of the borrowers, including the purchase of inventory and equipment, in each case in the ordinary course of business, to cash collateralize the outstanding amount of L/C obligations with respect to letters of credit and for general corporate purposes of the loan parties.