Mercon Coffee Corp., the bankrupt global coffee trader, must try to negotiate a cheaper way to fund its restructuring case after a U.S. judge rejected a proposed loan from Coöperatieve Rabobank, Bloomberg News reported. Rabobank had agreed to loan Mercon as much as $40 million that would pay about 15% interest, plus an upfront fee of 3% on part of the debt and the payment of $3.8 million in expenses, according to court documents and Bankruptcy Judge Michael E. Wiles. The loan also included provisions that made it likely Mercon would be forced to liquidate instead of being bought or reorganized, Wiles said. “On the whole I don’t think that arrangement is appropriate,” Wiles said during in the company’s first court hearing, which was held by telephone. “It is far too generous.” Mercon will try to negotiate a new deal with Rabobank and present it to Wiles in the next few days, company attorney Paul Keenan said. The company and Rabobank had argued it needed the loan just in case the price of coffee dropped so much that Mercon needed to make multi-million margin calls. The company has at least $12 million in cash in the bank, Keenan said. If the company can come to new terms with Rabobank, it may ask the judge to approve the loan during a rare, weekend court hearing, Keenan said. The company’s cash forecast showed Mercon won’t need any more money for at least the next few weeks, Daniel Rudewicz, a lawyer with the U.S. Trustee said during the hearing. That means the company may not need to borrow any money, Rudewicz said.
