Lionel Quality Electric Trains
Lionel Trains Announces Almost $60 Million DIP Financing


Mark Erickson          

(586) 949-4100 x 1467

Lionel LLC



Hollis Rafkin-Sax, 212-850-5789, or

Kristin Celauro, 212-850-5652,

Financial Dynamics




Fuels Major Marketing and Sales Initiatives


Files Notice of Appeal in Effort to Overturn Judgment in favor of MTH


Chesterfield, Michigan  - January 31, 2005 -- Lionel LLC, the nation’s number one model train maker, today announced it has reached two significant milestones in the century-old model train maker’s ongoing development and rebound from last summer’s court loss: the company has successfully completed its Debtor-in-Possession (DIP) financing package, totaling almost $60 million, and has filed notice with the United States Court of Appeals that it will attempt to overturn a $40 million judgment entered in favor of Mike’s Train House, Inc. (MTH) this past summer.


Jerry Calabrese, Lionel’s CEO, said, “I think these two events speak for themselves.  Not only does our new financing ensure we have the resources to aggressively grow our business, it also offers very adequate funding to redouble our efforts to overturn what we truly believe was an unjust verdict in favor of MTH.  The message should be very clear to our loyal fans and to our competitors: Lionel will continue to do business as it has always done business.  We will make the best products and sell them for a fair price, and let the marketplace, not the courts, decide our ultimate fate.


“The irony is that 2004 was one of Lionel’s best years in recent history, and there is strong demand and high praise for our new products, like the GG1 and last year’s runaway hit, The Polar Express train set.  And while we’re appreciative that the courts have approved our new financing and accepted our appeal, we’d rather spend our time, energy and money making great trains for the millions of people who love our brand and our products.”


Funds from the DIP financing will be used to fuel major marketing and sales initiatives and working capital, as well as to refinance approximately $35 million of existing debt.  Wachovia Bank National Association and Guggenheim Funding Corporation LLC provided the loans, which have a three-year maturity.


Lionel LLC is one of the world’s leading marketers of model trains and accessories. Established in 1900, the Lionel name is the most widely recognized brand in the toy train industry and one of the most recognized brands in America.  Lionel has been at the center of every major innovation in toy train manufacturing and marketing since its inception.


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Phone 586-949-4100 Fax 586-949-1013 WWW.LIONEL.COM