Battery maker Exide Technologies files for bankruptcy
June 11, 2013
Filed under News
Battery manufacturer Exide Technologies announced that it has filed a voluntary petition for reorganization pursuant to U.S. federal restructuring laws in order to facilitate the financial and operational restructuring necessary to strengthen its balance sheet and its business to position the company for future success.
Only Exide Technologies’ U.S. operations, including the GNB Industrial Division, are included in the filing. Exide Technologies’ international operations are excluded from the filing. The company plans to continue to operate globally without interruption during the reorganization.
“Operations both in the U.S. and in the rest of the world will continue to serve customers in a timely manner with the same quality products, and outstanding customer care as they did before the filing. All post-filing obligations to U.S. suppliers will be paid on time and within terms,” said James R. Bolch, president and chief executive officer. “We intend to pay U.S. employees as usual and do not expect any material changes to their benefits. Outside of the U.S., obligations to employees and suppliers will not be impacted by the filing.”
Exide has negotiated a $500 million debtor-in-possession (DIP) financing facility to be provided by a group of financial institutions and investors in connection with the filing. Once approved by the court, this financing will enhance the company’s global liquidity position with approximately $300 million in new capital, in order to allow it to pursue its restructuring goals. The proceeds of the DIP financing together with cash generated from daily operations and cash on hand will be used to fund post-petition operating expenses. Exide’s global management team will continue to manage both the U.S. and global businesses.
“Our company has been burdened by a highly leveraged balance sheet which has limited our ability to competitively invest in our businesses,” Bolch said. “Recently, our profitability has been impacted by unprecedented increases in our product costs — driven primarily by the market price of scrap lead in North America — as well as operational challenges in the U.S. and Europe, which we have been unable to fully offset. After a great deal of consideration, we concluded a restructuring of our balance sheet and our operations was the best path forward for the company.”
“Our restructuring,” he continued, “will allow us to strengthen our balance sheet and complete the operational changes that build upon the strategies that we have been pursuing. Over and above these efforts, we intend to become even more aggressive in reducing costs, taking actions with respect to underperforming business segments and to focus on the most attractive areas for future growth.”