Dimac Receives Court Approval of Restructuring Plan

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Dimac Corp., a direct response marketing solutions company, announced yesterday that its restructuring plan has been approved by the U.S. Bankruptcy Court in Wilmington, DE, setting the stage for the company to emerge from Chapter 11.

Dimac and its subsidiaries filed voluntary petitions for bankruptcy protection under Chapter 11 in April in an effort to improve its overall profitability and cash flow. Since then, Dimac has undertaken an operational and balance sheet restructuring plan, including hiring key individuals to lead its businesses, consolidating operations and improving profitability and its long-term growth prospects.

In October, St. Louis-based Dimac filed its disclosure statement and plan of reorganization with U.S. Bankruptcy Court.

At the confirmation hearing yesterday, the court approved the plan, under which its lenders will extend a line of credit of $20 million to the company in the form of an 18-month term loan, providing sufficient liquidity when the company exits Chapter 11. The effective date of the plan is subject to the sales of selected business units, after which Dimac's total debt will be reduced from approximately $391 million to $122 million, plus approximately $31 million in preferred stock. Annual cash interest expense will be lowered from more than $39 million to less than $10 million.

The plan is expected to become effective in late January, at which time Dimac would formally exit Chapter 11.

"We are extremely pleased the court has confirmed Dimac's restructuring plan," said Robert Kamerschen , chairman /CEO, Dimac. "The new year will also mark a bright, new beginning for Dimac. We will have achieved our Chapter 11 objectives of significantly reducing the company's debt level and improving our capital structure, allowing for the company's future growth.

"Dimac's operating strategies, structure and practices have been improved and effectively transformed into a healthier concern going forward. Our strengthened balance sheet will support our growth and enable us to be well positioned to lead the value-added direct response marketing services industry," he said.

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