Alco Stores Inc., a 198-store retailer largely serving small towns in 23 states, can finance the reorganization it began last week in Dallas with an interim loan capped at $50 million and letters of credit from pre-bankruptcy secured lenders led by Wells Fargo Bank NA, Bloomberg News reported yesterday. A bankruptcy judge on Friday signed an interim order approving the loan and allowing the company to use cash representing collateral for secured lenders’ claims. Alco filed for chapter 11 protection on Oct. 12 with a commitment from the lenders to provide senior secured financing consisting of a $110 million revolving credit and a term loan of about $12.7 million. In addition to funding the chapter 11 effort, the loans will be used to repay pre-bankruptcy debt. A hearing to approve the financing package on a final basis is scheduled for Nov. 12.
