Bankruptcy court approves $7-million loan for Diamond Glass

KINGSTON, Pa. ¡ª Diamond Glass said that the U.S. Bankruptcy Court Judge presiding over its Chapter 11 case in Delaware has granted several initial motions to enable continued normal operations. The rulings include interim approval of a new $7-million loan from Guggenheim Corporate Funding LLC along with authority to borrow up to $3.1 million over the next three weeks.
 
Diamond also won approvals to pay its employees and continue their benefit programs. Various customer programs also will be maintained, including the ability to honor customer warranties. The judge will allow Diamond to negotiate with ¡°critical vendors¡± to ensure an uninterrupted flow of product as the bankruptcy filing moves through the court process.
 
¡°With approval of our new financing and cash receipts from continuing operations, we have more than sufficient resources and liquidity to continue operating as normal during our Chapter 11 case,¡± says Bill Cogswell, Diamond¡¯s president. ¡°Our employees, our suppliers, our customers and everyone else who deals with us should see no difference in our day-to-day business.¡±
 
The court rulings assure that payroll will be met regularly, paychecks will be honored and the company will maintain all of its employee benefit programs, he said.
 
Diamond intends to ask the judge to allow it to be put up for auction. Although the company has already signed a purchase agreement with Guggenheim, an auction would subject Guggenheim¡¯s offer to competitive bidding by other potential buyers.
 
An important element of the proposed procedures, said Cogswell, is the additional offer by Guggenheim to provide ¡ª subject to certain conditions ¡ª up to $25 million of secured financing to bona fide purchasers and to provide additional working capital.
 
¡°The company expects that if Guggenheim is the successful purchaser, Guggenheim would continue the business in substantially the same manner as before,¡± Cogswell says.
 
A hearing for court approval of the auction process has been scheduled for April 24. The auction is expected to be held in early June.
 
Founded in 1923 by the Levine family and headquartered in Kingston, Pa., Diamond has a network of 217 service centers and 900 mobile installation vehicles in 42 states, serviced by three distribution facilities located in Kingston; Columbus, Ohio and Atlanta. It has about 1,600 employees, including field technicians, customer service representatives, sales associates and corporate associates.
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