Channel: Daily Bankrupt Company Updates | Bankrupt Company News
Viewing all articles
Browse latest Browse all 4593

Exide Holdings, Inc. – Battery Giant’s Third Chapter 11 in 20 Years Will be Its Last; As Part of Sales Efforts, Ad Hoc Group of Noteholders to Serve as Stalking Horse in Sale of EMEA & Asia-Pacific Businesses with $430mn Credit Bid


May 19, 2020 – Exide Holdings, Inc. and four affiliated Debtors (“Exide” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 20- 11157. The Debtors, a global provider of stored electrical-energy solutions, are represented by Daniel J. DeFranceschi of Richards, Layton & Finger, P.A.. Further board-authorized engagements include (i) Weil, Gotshal & Manges LLP as general bankruptcy counsel, (ii) Ankura Consulting Group, LLC as financial advisors, (iii) Houlihan Lokey Capital, Inc. as investment banker and (iv) Prime Clerk as claims agent. 

The Debtors’ lead petition notes between 5,000 and 10,000 creditors; estimated assets between $500.0mn and $1.0bn; and estimated liabilities between $1.0bn and $10.0bn. Documents filed with the Court list the Debtors’ three largest unsecured creditors as (i) California Department of Toxic Substances Control ($8.9mn regulatory fee claim), (ii) Daramic Incorporated ($3.1mn trade debt claim) and (iii) American Integrated Services (AIS) ($2.1mn professional services claim) 

Previous Bankruptcies

This is the Debtors' second chapter 11 filing in seven years and the third in under 20. In June 2013, Debtor Exide Technologies, LLC spent two difficult years in bankruptcy (lead case Delaware 13-11482, the “2013 Chapter 11 Case”).and eventually emerged having delevered their balance sheet by approximately $600.0mn; raised approximately $165.0mn in new capital; and secured a $200.0mn exit ABL financing facility. The Debtors emerged from their first Chapter 11 in April 2004 (that too a long two year process).

Unlike their first two Chapter 11s, however, the Debtors do not intend to pursue a recapitalization transaction to emerge as a reorganized business and speed will clearly be of the essence as they pursue sales. With respect to any assets that the Debtors are unable to sell to third party purchasers, the Debtors intend to liquidate or abandon such assets.

Filing Press Release

In a press release announcing the filing, the Debtors “announced a comprehensive strategy to best position its businesses in North America, EMEA, and Asia-Pacific to benefit its employees, customers, suppliers, and other stakeholders across the globe. This strategy is designed to restore the Company’s liquidity, which had deteriorated further as a result of the unprecedented global health and economic impact of the COVID-19 pandemic, while the Company pursues a sale of its assets.  

The Company has separately reached an agreement to sell its EMEA and Asia-Pacific business to an ad hoc group of its noteholders, subject to certain conditions outlined in the transaction documents, and subject to higher or better offers. This business is not included in the Chapter 11 proceedings and continues to operate as usual.”

Restructuring Support Agreement

Exide has entered into a restructuring support agreement (the "RSA," see Docket No. 14, Exhibit C) further to which an ad hoc group of the Company’s noteholders (the "Ad Hoc Group") will serve as a credit bidding stalking horse in a sale of the Debtors' EMEA and Asia-Pacific business.The agreement includes a “go-shop” period with a bid submission deadline and auction to be held in early July 2020.  

In connection with the RSA, the Ad Hoc Group submitted a binding term sheet (annexed to the RSA) containing certain key terms in respect of their $430.0mn "Europe/ROW Credit Bid." In connection with the Europe/ROW Credit Bid, the Ad Hoc Group has also committed to (i) provide an initial $25.0mn in interim financing to Exide International be used for working capital and general corporate purposes within the Exide Europe/ROW business segment, and up to $50.0mn of new money exit financing in their discretion (collectively, the “Interim Financing Facility”) and (ii) refinance all amounts owed by non-Debtor Exide Technologies (Transportation) Limited under the ABL Credit Agreement.

DIP Financing

Exide has obtained a commitment for debtor-in-possession (“DIP”) financing of $40.0mn to be provided by BTC Holdings Fund I, LLC and certain of the Debtors’ prepetition secured lenders (the “DIP Lenders”) and agented by Blue Torch Finance LLC. A copy of the term sheet containing certain key terms of the DIP Facility is annexed to the RSA.

Principal Shareholders

  • Mackay Shields LLC: 39.83%
  • Alliancebernstein LP: 19.12%
  • D.E. Shaw Galvanic Portfolios, L.L.C.: 10.76%
  • Neuberger Berman Group LLC: 6.38%

Events Leading to the Chapter 11 Filing

In a declaration in support of the Chapter 11 filing (the “Messing Declaration”), Roy Messing, the Debtors’ Chief Restructuring Officer, detailed the events leading to Exide’s Chapter 11 filing. The Messing Declaration provides: "Even after its emergence from bankruptcy in April 2015, the Company’s business continued to face significant operational challenges, substantial environmental costs, and industry trends that severely constrained its liquidity."

On an operational level, Messing highlights (i) the increased cost of lead following the closure of the Debtors' recycling facilities in Frisco, Texas and Vernon, California, (ii) continued operational inefficiencies (and reduced margins) at mixed-use facilities and (iii) the recent impact of the COVID-19 pandemic.

Operational shortcomings have in turn led to cash flows insufficient to service the level of debt with which the Debtors emerged from the 2013 Chapter 11 and which continued to grow as the Debtors funded expenditures on facility remediation costs and capital investments. As of March 31, 2020, the Company’s indebtedness was approximately 9.2x EBITDA with debt servicing costs have had the knock-on impact on limiting the Debtors’ ability to invest in product and growth initiatives. 

The Debtors also have considerable environmental obligations and liabilities which “could cost an additional $200 million or more to address over the next five years.”

Prepetition Indebtedness

As at filing, the Debtors, together with their non-Debtor affiliates, had outstanding funded debt obligations in the amount of approximately $817.4mn in the aggregate, summarized in the following chart:

 Instrument / Facility

Principal Outstanding

ABL Credit Agreement


10.75% Superpriority Lien Senior Secured Notes due 2021


11.0% Exchange Priority Notes due 2024


11.0% First Lien Senior Secured Notes due 2024


Total Secured Debt


3.79% Deferred Payment Notes due 2022


11.0% Unsecured Notes due 2020


11.0% Unsecured Notes due 2022


Total Unsecured Funded Debt




About the Debtors

According to the Debtors: “For more than 130 years, Exide Technologies, LLC (exide.com) has been Powering the World Forward as a global provider of stored electrical-energy solutions for the Transportation and Industrial markets. Headquartered in Milton, Georgia, Exide operates in 80 countries with more than 8,000 employees. Exide produces a range of battery and energy storage systems and specialty applications for the Transportation, Network Power and Motive Power markets and industries including agricultural, automotive, electric, light and heavy-duty truck, marine, materials handling, military, mining, power-sport, railroad, security, telecommunications, utility and uninterruptible power supply (UPS), among others. As one of the world’s largest secondary recyclers, the company is committed to environmental sustainability.”

The Messing Declaration adds: "Exide is a global leader in stored electrical energy solutions and one of the world’s largest producers and recyclers of lead-acid and lithium-ion batteries, with operations in more than twenty (20) countries. The Company is headquartered in Milton, Georgia and through its four global business groups – Transportation Americas, Transportation Europe and Rest of World (“ROW”), Industrial Energy Americas, and Industrial Energy Europe and ROW – the Company provides a comprehensive range of stored electrical energy products and services for industrial and transportation applications. The Company manufactures and distributes transportation and industrial batteries in North America, Europe, Asia, the Middle East, India, Australia, and New Zealand."

Corporate Structure Chart (see Exhibit A to Messing Declaration)

Read more Bankruptcy News

The post Exide Holdings, Inc. – Battery Giant’s Third Chapter 11 in 20 Years Will be Its Last; As Part of Sales Efforts, Ad Hoc Group of Noteholders to Serve as Stalking Horse in Sale of EMEA & Asia-Pacific Businesses with $430mn Credit Bid appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.

Viewing all articles
Browse latest Browse all 4593

Latest Images

Trending Articles

Latest Images