EXIDE BANKRUPTCY UPDATE: Exide gets nod for Chapter 11 reorganization plan disclosure
Exide Gets Nod For Ch. 11 Reorganization Plan Disclosure
Law360, Wilmington (February 04, 2015, 7:50 PM ET) — A Delaware bankruptcy judge on Wednesday gave Exide Technologies Inc. the green light to solicit votes for a restructuring plan that would trim roughly $600 million in debt and blessed a slate of motions designed to facilitate the battery maker’s exit from Chapter 11.
At a hearing in Wilmington, U.S. Bankruptcy Judge Kevin J. Carey agreed to sign off on Exide’s plan disclosure statement, as well as a recent settlement with various creditors and backstop agreement that would fund up to $160 million in new debt.
“I am prepared to approve the disclosure statement as containing adequate information,” Judge Carey said.
Exide also won court approval for the fast-tracked settlement reached last week with senior secured creditors and the committee of unsecured creditors that resolves a series of antitrust, intellectual property and pension concerns.
Judge Carey overruled objections raised by the U.S. Trustee’s Office about the merits of the deal, finding that the trustee’s “vision of the breadth of committee’s obligations is too extensive.”
The settlement is intertwined with Exide’s Chapter 11 plan and the other motions before the court, Judge Carey said, and clears away issues that would otherwise have been contested at confirmation.
“This is an important step toward reorganization,” the judge said.
Under the agreement, a general unsecured claim trust will be created and seeded with $3 million in funding from recoveries from preference actions.
The trust would also distribute value from the potential sale of Exide’s intellectual property and various causes of action, including what might be recovered from the creditors committee’s investigation into possible lead price-fixing that could have affected the battery maker.
The deal also calls for the continuation of Exide’s defined-benefit pension plan and the assumption of collective bargaining agreements, and would have the participating creditors vote to support the Chapter 11 plan.
Judge Carey also signed off on an unopposed plan support agreement between Exide and the majority of its senior noteholders and a related deal in which several of the senior creditors have agreed to backstop up to $160 million in new junior debt.
While approval of the disclosure statement allows Exide to solicit votes for its stand-alone restructuring plan, the company will continue to market itself for sale in the meantime, as called for under the PSA.
“We’re not going to shoot ourselves in the foot and stop trying to bring in a better deal,” Exide attorney James J. Mazza of Skadden Arps Slate Meagher & Flom LLPtold the court Wednesday.
Exide’s Chapter 11 plan, proposed in November, would see the battery maker shed about $600 million of its $1.4 billion in liabilities, which include $675 million in outstanding principal on the senior secured notes and more than $546 million owed under a debtor-in-possession financing package, according to the disclosure statement.
Eligible senior noteholders would receive 15 percent of the reorganized company’s equity and the chance to participate in a $175 million rights offering for new second-lien convertible notes, as well as the option to purchase a portion of the $346.8 million in DIP term loan claims, according to court documents.
A plan confirmation hearing is scheduled for March 27.
Exide, one of the largest producers of lead batteries for the industrial and transportation markets, sought court protection for its U.S. operations in June 2013.
The Georgia-based company cited numerous reasons for its second entry into Chapter 11, including rising production costs, intense competition, reduced access to credit and an April 2013 order by a California regulatory agency that halted operations at one of its plants, a move blocked by a state judge’s ruling three months later.
Exide is represented by Anthony W. Clark, Kenneth S. Ziman, J. Eric Ivester and James J. Mazza Jr. of Skadden Arps Slate Meagher & Flom LLP.
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 Matt Chiappardi and Andrew Scurria. Editing by Brian Baresch.