The Handleman company has reached an agreement with its lenders that may give the company some breathing room. In advance of its previous May 31 deadline that could have found the Troy, Mich.-based rackjobber in default of its loan, Handleman has reached an agreement to amend the facility so that it can draw down funds as long as its in compliance with the new terms. The loans mature on April 12, 2012.

As part of that agreement, the company has reduced its revolving credit facility to $163 million. Of that $113.4 million is supplied by Silver Point Finance while GE Capital supplies $50 million. Previously, Silver Point had provided $140 million and GE, $110 million.

In its 8-k filing with the Securities and Exchange Commission, the company said it had drawn down $63.3 million from its facility, and source say it has about $5-$7 million in cash on hand, but the company didn't say where availability stands, under the loan's formula. "We have sufficient availability," a company spokesman said, but wouldn't provide details because the exact amount changes daily.

When the company previously had credit lines totaling $250 million, it violated a covenant when on Jan. 31 it had drawn down $90 million, but only had $110 million in collateral when the loan's lending formula required $118 million on hand to secure that amount.

In other news, Handleman announced that it had hired the investment banking firm of W.Y. Campbell and Co. to explore a sale or other strategic options for its Crave videogame subsidiary.

The company's share, which trades as a pink sheet, closed at $1.01, up 23 cents from the previous day's close of 78 cents.