EXIDE BANKRUPTCY BREAKING NEWS: Court gives Exide 30-day exclusivity extension to file its Plan of Reorgnaization; Exide president expresses commitment to investment in plants and facilities — perhaps to bring them into compliance with state and federal regulations? No mention made of any Exide plans for communities negatively impacted by its violation-plagued current and former operations
While Exide’s Caruso stated that the company “continues to invest in its business, and this amendment to the DIP supports our commitment to ongoing improvements in our operations and facilities,â€Â he made no mention of what plans Exide has to address the communities that have been negatively impacted by the plant’s emissions of lead, arsenic and other toxins into the air, water and soil, often at levels that exceeded state and federal legal limits.
Exide received approval today from a Delaware bankruptcy for a 30-day deadline extension of the company’s exclusive rights to file its Plan of Reorganization (POR). The approval was for an amendment to its  debtor-in-possession (DIP) credit agreement, which will allow the company to extend the deadline to file its (POR) from May 31, 2014, to June 30, 2014.
Exide originally requested a 60-day extension that would have extended the deadline to July 31, 2014.
Exide requested the extension saying creditors need time to review amended projections that address the impact of recent environmental regulations on its California battery recycling plant.Â
Exide has developed a restructuring path out of Chapter 11, but the outline the company presented to key constituencies in March became outdated in April, when strict air pollution regulations went into effect that cast doubt on the California plant’s future, according to the exclusivity motion.
Exide’s original exclusive window to file a Chapter 11 plan closed May 31, and a one-month extension gives its creditors and lenders time to evaluate the updated forecasts and prevent the distraction of competing plans.
“Exide and its advisors believe that it is prudent to provide the unofficial committee of secured noteholders and the official committee of unsecured creditors additional time to review and consider the company’s revised five-year business plan submitted to them earlier this month (May),†says Robert Caruso, president and CEO of Exide Technologies. “In connection with this expectation, we believe it would be beneficial to extend the May 31 milestone date to submit the POR under our DIP financing by an additional 30 days.â€
The amendment also increases the quarterly and rolling four quarter capital expenditure limits to $36 million and $120 million, respectively.
While Exide’s Caruso stated that the company “continues to invest in its business, and this amendment to the DIP supports our commitment to ongoing improvements in our operations and facilities,â€Â he made no mention of what plans Exide has to address the communities that have been negatively impacted by the plant’s emissions of lead, arsenic and other toxins into the air, water and soil, often at levels that exceeded state and federal legal limits.
One of the largest producers of lead batteries for the industrial and transportation markets, Georgia-based Exide sought court protection for bankruptcy in June 2013, looking to restructure about $1 billion in debt. The bankruptcy only included Exide’s U.S. operations, including its GNB Industrial Division. Exide’s international operations are excluded from the filing.
The lead-acid battery recycling plant in Vernon, California — which provides Exide with roughly 30 percent of the lead for its domestic production — is currently idle while the company determines its fate.
California’s South Coast Air Quality Management District in January adopted stiffer standards to limit arsenic emissions, imposing an April 10 deadline for the Vernon plant to modify its air pollution control system, according to court documents.
Exide’s two bids to delay the deadline both failed last month, as SCAQMD denied its request for a temporary variance and a California court refused to issue a preliminary injunction, according to the motion.
Operations at the Vernon plant, which had been halted in mid-March for scheduled maintenance, have not resumed in the wake of the rulings, the company said.
Exide is weighing whether to fund the capital improvements required to restart the plant or to shutter it permanently and instead get the lost lead from third parties, according to the motion.
Trouble with the Vernon plant was one of the factors that drove Exide into Chapter 11, as the facility was temporarily closed in April 2013 by another set of state regulators, costing the battery maker millions of dollars in projected earnings, according to court documents.
California’s Department of Toxic Substances Control ordered a shut down of the Vernon facility in April 2013 after articles in the Los Angeles Times stated that arsenic levels at the plant posed health risks to nearby communities.
After granting an interim stay, a California judge issued a preliminary injunction in July blocking the DTSC from closing the plant.
Exide and the agency struck a deal in October, with the company agreeing to spend $7.7 million to upgrade the plant.
In January, a week after issue new regulations, SCAQMD launched a lawsuit against Exide, seeking $40 million in penalties stemming from alleged illegal emissions of lead and arsenic at the Vernon plant.
In February, the City of Frisco, TX, accused Exide of being in default of its agreement to demolish and appropriately clean up its lead smelter/battery recycling plant that closed in November 2012.
In court documents, the city said it’s not only concerned about default, but that it may have also other claims against Exide, including “…gross negligence, conspiracy, and… fraud.â€
Because Exide is in bankruptcy, its obligations are on hold and under review by a judge.
The city says it won’t know if the company will stick with the deal or walk away from it until the company files its reorganization plan, which is now due on June 30.
Until the Exide plant was closed two years ago, a one mile area around it was one of 16 in the U.S. that exceeded air quality standards for lead.
In March, officials with the California State Department of Toxic Substances Control issued health warnings, telling people not to let children play in bare soil or eat leafy green vegetables grown in it. They also ordered additional testing of more homes, and told Exide to come up with a plan to protect small children and pregnant women living in places with elevated lead levels.
The warnings came after elevated levels of lead were found in soil at homes and a preschool near Exide’s lead battery recycling plant in southeast Los Angeles.
State officials said the initial testing of 39 homes and apartments as well as two schools concerned them enough that they ordered Exide to create a plan for more testing and to protect children and pregnant women living in the area.
Last week, the U.S. Environmental Protection Agency accused the battery recycling facility of violating federal limits on lead emissions on more than 30 occasions between September and April of this year.
This story was compiled from stories at:
and previous posts on this site from the Los Angeles Times, CBS 11 – DFW (see links above)Â
