FAO to Emerge From Chapter 11

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The U.S. Bankruptcy Court for the District of Delaware approved FAO Inc.'s reorganization plan yesterday, letting the company emerge from Chapter 11 and begin making distributions to creditors pursuant to the terms of the plan.

The plan becomes effective this month.

FAO, King of Prussia, PA, got a commitment for up to $77 million in financing to fund operations once the plan takes effect. The financing includes a $67 million revolving credit facility provided by a group of banks led by Fleet Retail Finance Inc., and a $10 million term loan by Back Bay Capital Funding LLC.

The company also received agreements for the purchase of $30 million in convertible preferred stock from a group of investors led by Kayne Anderson Capital Advisors L.P.

The company completed its Chapter 11 reorganization in 83 days.


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