The amended agreement between Diamond and lender JP Morgan Chase provides for loans of up to $44,700,000, an increase of $3.7 million over the initially agreed $41 million (see "DIP Financing Order"). Since Diamond owed $32.6 million to Chase when it filed for Chapter 11 bankruptcy protection in January, this increases the amount of new financing to $12.1 million from the $8.4 million available under the original agreement. Diamond requested the increase "…to maintain their current level of inventory purchases pending the sale of the Debtors’ operating assets," and the bank agreed, according to the order. The creditors' committee reviewed the increase and had no objections.
The order was issued on March 19, the deadline for submission of bids for the company's assets (see "Plans for Auction of Diamond, Alliance"). Assuming there are bids beyond the stalking horse bid by Universal Distribution for Alliance Game Distributors and Diamond UK, a live auction will be held next Monday, March 24.
To exceed the Universal bid, other bidders will have to bid at least $40,865,000, or the value of the Universal bid plus a 3% break-up fee, plus Universal's expenses (capped at 0.5% of the sale price), plus $500,000. Universal's bid also provides that if it buys Alliance, it will take over Diamond UK, paying for the value of Diamond UK’s assets (receivables, inventory, etc.), less liabilities (money owed publishers, etc.), less £200,000.
It appears there may be substantial bidding for the assets, with Diamond's restructuring consultant telling ICv2 that the process was attracting new interest post-filing, and direct and indirect information from other sources that indicated that well-funded buyers that are strategically connected but outside the comics and games businesses are circling Diamond assets (see "Taking the Temperature").
