Court OKs $1.1B Circuit City Loan

By Alan Wolf -- TWICE, 12/22/2008

Richmond, Va. — A federal bankruptcy court here has approved $1.1 billion in financing for Circuit City.

The revolving credit facility will allow the CE chain to pay vendors and other suppliers for goods and services received after it filed for Chapter 11 bankruptcy protection last month.

Circuit City will also use a portion of the new debtor-in-possession facility to pay off debt from its previous $1.3 billion asset-based credit line. Both loans were packaged by a lender group that includes Bank of America, Wells Fargo and GE Capital.

Separately, the court has allowed the retailer to break severance agreements with 40 former executives including ex-chairman/CEO Phil Schoonover, and to reject a contract with the MGM Grand Hotel & Casino in Las Vegas for room reservations during next month’s International CES. The company was also authorized to break two service agreements with YouTube, including one for a Circuit City micro site it hosted last fall for football fans.