Bloomberg News

Nebraska Book Wins Approval of $125 Million Bankruptcy Loan

June 29, 2011

(Updates with final loan hearing in third paragraph)

June 29 (Bloomberg) -- Nebraska Book Co., an operator of a nationwide chain of college bookstores, won court approval to borrow as much as $125 million to help fund operations while in bankruptcy.

U.S. Bankruptcy Judge Peter Walsh gave the company permission to borrow the funds on an interim basis, according to court papers filed yesterday in Delaware. A JPMorgan Chase & Co. unit is acting as the agent for lenders.

Nebraska Book will seek court approval to borrow an additional $75 million from the total $200 million financing package at a hearing set for July 21, court documents show.

The company, based in Lincoln, Nebraska, listed about $657.2 million in assets and about $564 million in debt as of Feb. 14, including the debt and assets of affiliates, in Chapter 11 documents filed this week in Wilmington.

Nebraska Book currently has about 280 stores on and off campus. It also has one of the largest wholesale distribution networks of used textbooks, supplying college bookstores with more than 105,000 different book titles and selling more than 6.3 million books a year.

The funds allow them to acquire the textbooks and other supplies they need for the fall back-to-school rush, which were historically obtained on credit from vendors, the company said in court papers.

The loan was necessary to “seamlessly transition their business into Chapter 11 at this critical stage in their business cycle and ultimately reorganize in a successful and expedient manner.”

Noteholder Support

The company reached an agreement on a restructuring with the support of more than 95 percent of the holders of its 8.625 percent senior subordinated notes and more than 75 percent of its 11 percent discount noteholders. The bookseller said in a June 27 statement it will restructure about $450 million in loans and bonds of its parent, NBC Acquisition Corp., and affiliates.

Nebraska Book has proposed a restructuring that would turn control of the company over to noteholders, court papers show. Under the proposal, $175 million in 8.625 million senior subordinated notes would be converted into $30.6 million in secured notes, $120 million in unsecured notes and 78 percent of the new equity. Holders of the $77 million in 11 percent discount notes would receive the remaining 22 percent of the stock.

Secured lenders, owed about $26.3 million, and secured noteholders, owed about $200 million, would be paid in full with cash.

The case is In re Nebraska Book Co. Inc., 11-12005, U.S. Bankruptcy Court, District of Delaware (Wilmington).

--Editors: Fred Strasser, Glenn Holdcraft

To contact the reporter on this story: Michael Bathon in Wilmington, Delaware, at mbathon@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net


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