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.
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.
About Exide Technologies
Exide Technologies, with operations in more than 80 countries, is one of the world's largest producers and recyclers of lead-acid batteries. The Company's global business groups provide a comprehensive range of stored electrical energy products and services for industrial and transportation applications. Transportation markets include original-equipment and aftermarket automotive, heavy-duty truck, agricultural and marine applications, and new technologies for hybrid vehicles and automotive applications. Industrial markets include network power applications such as telecommunications, electric utilities, railroads, photovoltaic (solar-power related) and uninterruptible power supply (UPS), and motive-power applications including lift trucks, mining and other commercial vehicles.
Forward Looking Statement
This press release contains forward-looking statements with respect to our Chapter 11 filing and related matters. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.
Factors that could cause actual results to differ materially from these forward looking statements include, but are not limited to, the following general factors such as: (i) the plan proposal referenced herein is non-binding and there can be no assurance that the Company will reach a definitive agreement for a plan of reorganization, (ii) the ability of the Company to develop, prosecute, confirm and consummate the Chapter 11 plan of reorganization, (iii) the potential adverse impact of the Chapter 11 filing on the Company's liquidity and operations and the risks associated with operating businesses under Chapter 11 protection, (iv) the ability of the Company to comply with the terms of the DIP financing facility, (v) the Company's ability to obtain additional financing, (vi) the Company's ability to retain key management and employees, (vii) customer response to the Chapter 11 filing, (viii) the risk factors or uncertainties listed from time to time in the Company's filings with the Securities and Exchange Commission and with the U.S. Bankruptcy Court in connection with the Company's Chapter 11 filing, (ix) the fact that lead, a major constituent in most of the Company's products, experiences significant fluctuations in market price and is a hazardous material that may give rise to costly environmental and safety claims, (x) the Company's ability to implement and fund business strategies based on current liquidity, (xi) the Company's ability to realize anticipated efficiencies and avoid additional unanticipated costs related to its restructuring activities, (xii) the cyclical nature of the industries in which the Company operates and the impact of current adverse economic conditions on those industries, (xiii) unseasonable weather (warm winters and cool summers) which adversely affects demand for automotive and some industrial batteries, (xiv) the Company's substantial debt and debt service requirements which may restrict the Company's operational and financial flexibility, as well as imposing significant interest and financing costs, (xv) the litigation proceedings to which the Company is subject, the results of which could have a material adverse effect on the Company and its business, (xvi) the realization of the tax benefits of the Company's net operating loss carry forwards, which is dependent upon future taxable income, (xvii) competitiveness of the battery markets in the Americas and Europe, (xviii) risks involved in foreign operations such as disruption of markets, changes in import and export laws, currency restrictions, currency exchange rate fluctuations and possible terrorist attacks against U.S. interests, (xix) the ability to acquire goods and services and/or fulfill later needs at budgeted costs, (xx) general economic conditions, (xxi) the Company's ability to successfully pass along increased material costs to its customers, (xxii) recently adopted U.S. lead emissions standards and the implementation of such standards by applicable states, and (xxiii) the Company's ability to resume operations at its Vernon, California recycling facility.