The Loewen Group (HBS Case 9-201-062)

In June 1999 the Loewen Group, the second largest funeral company in North America, filed for Chapter 11 bankruptcy protection. At that time, the Loewen Group employed 16,000 people at 1097 funeral homes and over 426 cemeteries in the United States, Canada, and the United Kingdom. There were 1300 corporate entities (subsidiaries) in two countries comprising Loewen. "We had about 85 people in our tax department trying to file returns on all of them," said John Lacey, a corporate turnaround executive and newly appointed chairman of the Loewen Group. "There were no administrative synergies. There were silos of management that didn't talk to each other. It was singularly the biggest mess I have ever seen."

As part of that filing, Loewen lined up debtor-in-possession financing of $200 million. A summary of that financing follows..

Loewen owes approximately $2.1 billion to its bank lenders and noteholders.
That debt is secured by liens on a pool of shared collateral (including all
accounts, contracts, contractual rights, chattel paper, documents,
instruments and general intangibles), guaranties, and stock pledges.
Additionally, Fairway Finance Corporation is owed $49 million under the
Neweol Receivables Facility, another $35 million is owed under promissory
notes, and another $100 million is owed on account of other secured and
unsecured indebtedness.  In short, the liabilities are staggering.
Financial performance has deteriorated.  As of the commencement of the
Insolvency Proceedings, Loewen's credit sources were fully tapped.

To provide Loewen's with access to fresh working capital, First union
National Bank agrees to lend up to $200,000,000 under the terms of a Post-
Petition Revolving Credit Agreement.  This Debtor-in-Possession Financing
Facility will be secured by a first priority lien on all previoulsy
unencumbered assets and will constitute a superpriority administrative
expense claim pursuant to 11 U.S.C. Sec. 364(c)(1).

The DIP Facility, with Judge Farnan's interim approval at the First Day
Hearing, provides the Company, on an interim basis through the time of a
Final Hearing, with access to up to $60,000,000 of credit.  On a final
basis, but not past June 1, 2001, the DIP Facility will provide up to
$200,000,000 of credit, $150,000,000 of which will be in the form of
revolving loans and $50,000,000 of which will back letters of credit.  The
proceeds of the loan will be used to immediately refinance the Neweol
Receivables Facility.  Further draws will be made to fund on-going working
capital needs.

Borrowings under the DIP Facility will accrue interest at the Federal Funds
Rate plus 1.75%.  First Union will collect a $1,800,000 Structuring and
Closing Fee; an Unused Line Fee equal to 0.50% per annum on all amounts not
borrowed; letter of credit fees of 2.5% per annum; and reimbursement of all
professional fees.

First Union's liens will be subject to a $10,000,000 Carve-Out for patyment
of professional fees and fees of the U.S. Trustee.

Loewen agrees that any sale of assets in excess of $2,000,000 will require
the consent of 66-2/3% of the Lending Syndicate Members, and that any sale
proceeds must be paid to the DIP Lenders.

Loewen covenants with the DIP Lenders to maintain Minimum Cemetery Operating
Cash Flows of no less than:

                                  Minimum for the       Minimum for the Prior
    For the Period Ending     Current Fiscal Quarter    Four-Fiscal Quarters
    ---------------------     ----------------------    ---------------------
    June 30, 1999                  ($15,000,000)             ($15,000,000)
    September 30, 1999             ($10,000,000)             ($25,000,000)
    December 31, 1999               ($5,000,000)             ($30,000,000)
    March 31, 2000                            0              ($30,000,000)
    June 30, 2000                    $5,000,000              ($10,000,000)
    September 30, 2000               $5,000,000                $5,000,000
    December 31, 2000                $5,000,000               $15,000,000
    March 31, 2001                   $5,000,000               $20,000,000

Minimum Non-Cemetery Operating Cash Flows shall be no less than:

                                  Minimum for the       Minimum for the Prior
    For the Period Ending     Current Fiscal Quarter    Four-Fiscal Quarters
    ---------------------     ----------------------    ---------------------
    June 30, 1999                   $10,000,000               $10,000,000
    September 30, 1999              $10,000,000               $20,000,000
    December 31, 1999               $20,000,000               $40,000,000
    March 31, 2000                  $30,000,000               $70,000,000
    June 30, 2000                   $20,000,000               $80,000,000
    September 30, 2000              $20,000,000               $90,000,000
    December 31, 2000               $30,000,000              $100,000,000
    March 31, 2001                  $30,000,000              $100,000,000

Consolidated Operating Cash Flows shall be no less than:

                                  Minimum for the       Minimum for the Prior
    For the Period Ending     Current Fiscal Quarter    Four-Fiscal Quarters
    ---------------------     ----------------------    ---------------------
    September 30, 1999             ($10,000,000)             ($10,000,000)
    December 31, 1999               $10,000,000                        $0
    March 31, 2000                  $20,000,000               $20,000,000
    June 30, 2000                   $15,000,000               $35,000,000
    September 30, 2000              $15,000,000               $60,000,000
    December 31, 2000               $20,000,000               $70,000,000
    March 31, 2001                  $20,000,000               $70,000,000


Minimum Funeral Home Gross Margins (similar to an EBITDAL calculation) shall
not be less than:

           For the 3-Month                Minimum Funeral
            Period Ending                Home Gross Margin
           ---------------               -----------------
           June 30, 1999                    $45,000,000
           July 31, 1999                    $43,333,333
           August 31, 1999                  $41,666,667
           September 30, 1999               $40,000,000
           October 31, 1999                 $43,333,333
           November 30, 1999                $46,666,667
           December 31, 1999                $50,000,000
           January 31, 2000                 $53,333,333
           February 28, 2000                $56,666,667
           March 31, 2000                   $60,000,000
           April 30, 2000                   $56,666,667
           May 31, 2000                     $53,333,333
           June 30, 2000                    $50,000,000
           July 31, 2000                    $48,333,333
           August 31, 2000                  $46,666,667
           September 30, 2000               $45,000,000
           October 30, 2000                 $50,000,000
           November 30, 2000                $55,000,000
           December 31, 2000                $60,000,000
           January 31, 2001                 $60,000,000
           February 28, 2001                $60,000,000
           March 31, 2001                   $60,000,000
           April 20, 2001                   $60,000,000
           May 31, 2001                     $60,000,000

The DIP Facility restricts decreases in "Same-Store" revenues by requiring
that Loewen shall not permit Funeral Home Revenues for the 3-month period
ending as of the last day of any fiscal quarter to be less than (i) in the
case of the fiscal quarters ending on June 30, 1999 and September 30, 1999,
92.5% and (ii) thereafter, 95% of the Funeral Home Revenue for the 3-month
period ending on the last day of the corresponding fiscal quarter in the
immediately preceding year.

The DIP Lenders prohibit any single acquisition in excess of $2,000,000 or
more than $10,000,000 in acquisitions during any 12-month period.  Capital
Expenditures are limited to:

                For the Period                        Maximum CapEx
                --------------                        -------------
      April 1, 1999 to September 30, 1999              $16,000,000
      April 1, 1999 to December 31, 1999               $31,900,000
      April 1, 1999 to March 31, 2000                  $49,900,000
      July 1, 1999 to June 30, 2000                    $67,900,000
      October 1, 1999 to September 30, 2000            $69,900,000
      January 1, 2000 to December 31, 2000             $72,000,000
      April 1, 2000 to March 31, 2001                  $72,000,000

Source: DEBTORS' MOTION FOR APPROVAL OF $200,000,000 DIP FACILITY, Loewen Bankruptcy News, June 2, 1999