EXIDE BANKRUPTCY BREAKING NEWS: Exide informs bankruptcy court about Plan of Reorganization submitted by unofficial committee of senior secured note holders; deadline for Exide submitting its own Plan of Reorganization extended once again – to July 31.
From Exide’s news release: “The non-binding POR proposal contemplates substantial deleveraging of the Company’s debt by more than $700 million, a sizable investment of new equity capital, and new debt to fund the Exide Chapter 11 emergence and post-emergence business — including liquidity and working capital to support the Company’s operations, seasonality and growth of the Company’s businesses; capital improvements; and environmental, health and safety investments.”
To read Exide’s 8-K filing with the Securities Exchange Commission, click here, and then, when on the SEC – Exide page, click on “Current Report” to the right of the *8-K” entry in the Filing category.
LAW 360
Exide Reveals Restructuring Proposal To Cut $700M In Debt
Law360, Wilmington (July 02, 2014, 4:22 PM ET) — Battery maker Exide Technologies Inc. told a Delaware bankruptcy judge Wednesday that it has received a plan-of-reorganization proposal from a group of noteholders that would deleverage the debtor by about $700 million and includes a $300 million new equity investment.
At a hearing in Wilmington, Exide attorneys informed U.S. Bankruptcy Judge Kevin J. Carey about the proposal from the unofficial committee of senior secured noteholders, which holds the majority of the debtor’s $500 million debtor-in-possession financing package. The plan would fund the company’s expected emergence from Chapter 11 with a combination of a new equity investment and new debt.
Judge Carey made no comment about the proposed reorganization plan, but Exide revealed some of its details in a press release.
A portion of the $300 million new equity investment would be in the form of a rights offering and be backstopped by certain members of the noteholder committee, with the balance being bought by the same parties, according to the release.
The new debt would be for about $185 million, borrowed from the same noteholders, as well as an asset-based loan obtained from an unidentified third party for an undisclosed amount, Exide said.
In order to make the proposed strategy work, the noteholders agreed to extend the deadline in the DIP loan agreement for filing a Chapter 11 plan from June 30 to July 31, and increase the maximum amount of letters of credit that can be issued under the facility from $75 million to $85 million.
“We believe the [noteholders’] proposal is a significant step forward in our Chapter 11 process, and we look forward to continuing work with members of the [committee] to memorialize a binding agreement as well as executing our longer-term turnaround and driving results for the business,†Exide President and CEO Robert M. Caruso said in a statement.
Exide hopes to emerge from Chapter 11 by the end of the year and says it has a comprehensive five-year business plan for all of its business lines — industrial, recycling and transportation — for both its debtor and nondebtor operations, according to the release.
Meanwhile, Judge Carey said Wednesday that he would consider a push by some shareholders to form an equity committee later this month at an evidentiary hearing.
The call for a shareholder committee comes from investor Alfred M. Shams, who argues that Exide had positive net worth when it filed for Chapter 11 protection one year ago and that the problems with its lead-acid battery recycling plant in Vernon, California, were used as a “cover†for a case that will liquidate equity holders and junior creditors. The plant was temporarily closed by California regulators in April 2013, prompting, in part, Exide’s filing.
Those concerns were shared by fellow investor Landon Romano, and Judge Carey scheduled a hearing on the matter for July 22.
The shareholders represented themselves pro se at the hearing Wednesday, but said they intend to retain counsel for the hearing.
Georgia-based Exide, one of the largest producers of lead batteries for the industrial and transportation markets, filed for Chapter 11 protection in June 2013, citing rising production costs, intense competition and reduced access to credit and looking to restructure $1 billion in debt.
The company’s non-U.S. operations were not included in the filing and continue to operate without the court’s supervision, according to Exide.
The case is In re: Exide Technologies, case number 1:13-bk-11482, in the U.S. Bankruptcy Court for the District of Delaware.
–Additional reporting by Jamie Santo. Editing by Patricia K. Cole.
Below is from a new release distributed by Exide:
Exide Technologies Receives Proposal for Plan of Reorganization From Substantial Majority of Senior Secured Noteholders
Proposed POR Would Substantially Deleverage Company
MILTON, Ga., June 30, 2014 (GLOBE NEWSWIRE) — Exide Technologies (OTCQB:XIDEQ) (www.exide.com, the “Company”), a global leader in stored electrical-energy solutions, announced today that it received a non-binding proposal for a Plan of Reorganization (POR) from the Unofficial Committee of Senior Secured Noteholders (UNC).
The UNC members hold a substantial majority of the Company’s Debtor-in-Possession (DIP) facility term loan and prepetition senior secured notes. The proposal follows extensive discussions among the Company and certain members of the UNC who executed confidentiality agreements with Exide. The Company also received an amendment to the DIP facility providing for an extension of the June 30, 2014 deadline under the DIP facility to file a Chapter 11 POR. In addition, Exide received an extension of the delivery date under the DIP facility to file audited financial statements for fiscal year 2014 from 90 days following fiscal year-end until August 15, 2014.
Contemplated Exit Funding under POR
The non-binding POR proposal contemplates substantial deleveraging of the Company’s debt by more than $700 million, a sizable investment of new equity capital, and new debt to fund the Exide Chapter 11 emergence and post-emergence business — including liquidity and working capital to support the Company’s operations, seasonality and growth of the Company’s businesses; capital improvements; and environmental, health and safety investments.
The proposed new equity investment would comprise an issuance of approximately $300 million of preferred convertible equity (a portion of which is contemplated to be issued in connection with a Rights Offering backstopped by certain members of the UNC and the balance of which would be in the form of a direct equity purchase by such members).
The proposed new debt issuance is contemplated to be approximately $185 million and would be backstopped by certain members of the UNC. The non-binding proposal also contemplates a new asset based loan (ABL) facility, the commitments for which would be obtained from third-party lenders in conjunction with the POR confirmation process.
All of the transactions contemplated by the non-binding proposal would be subject to various conditions precedent, including filing of Exide’s audited financial statements and completion of the investigation referenced in Exide’s filing on Form 12b-25 dated today.
Exide believes the proposed POR and related transactions, if documented and consummated, would position the Company to execute its comprehensive five-year business plan under which all Exide global groups — Industrial, Recycling, and Transportation — would remain operational and continue serving its customers. Exide is pleased with the progress of discussions with certain members of the UNC and views the proposal as highly constructive.
The Company intends to carefully evaluate the proposal and continue discussions with certain members of the UNC — as well as its other stakeholders, including its Official Committee of Unsecured Creditors — and Exide anticipates advancing negotiations to the POR proposal and related definitive documentation.
DIP Amendments
To facilitate completion of the definitive documentation for its re-capitalization under the proposed POR framework, Exide has obtained an amendment to the DIP facility, effective June 27, 2014, whereby the Company’s previous June 30, 2014 deadline for filing its POR has been extended to July 31, 2014, and the milestone date for soliciting acceptance of the POR has been eliminated. Exide also has secured an increase of the maximum amount of the letters of credit that can be issued under the DIP facility from $75 million to $85 million in connection with this amendment.
Further, the Company contemporaneously secured an additional amendment to the DIP facility to extend the filing date of its financial statements for fiscal year 2014 from June 30, 2014 until August 15, 2014.
“Since filing for Chapter 11 restructuring in June 2013, Exide has made substantial progress in improving operations and developing a five-year business plan while continuing to service our customers,” said Robert M. Caruso, President and Chief Executive Officer of Exide Technologies. “We believe the UNC’s proposal is a significant step forward in our Chapter 11 process, and we look forward to continuing work with members of the UNC to memorialize a binding agreement as well as executing our longer-term turnaround and driving results for the business.”
The Company anticipates emerging from Chapter 11 restructuring for its U.S. operations by the end of 2014.
Additional details regarding the DIP amendments can be found in the Company’s 8-K, filed today with the U.S. Securities and Exchange Commission, at http://ir.exide.com/sec.cfm.
