MILTON, Ga. (June 11, 2013) — Exide Technologies, an international maker and recycler of lead-acid batteries, filed for Chapter 11 bankruptcy protection on June 10 in U.S. Bankruptcy Court in the District of Delaware.
The Milton-based company said it filed a voluntary petition for reorganization under 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 its GNB Industrial Division — are included in the filing. The company's international operations are excluded from the filing, and Exide said it plans to continue to operate globally without interruption during the reorganization.
The move comes after Exide was forced to suspend operations at its battery recycling plant in Vernon, Calif., over alleged hazardous waste violations. The company obtains the bulk of the lead used in manufacturing batteries from its recycling operations, it stated in the bankruptcy filing.
The filing lists assets of $1.89 billion and debts of $1.14 billion.
Exide must still comply with applicable laws regarding remediation efforts at its Vernon site and elsewhere, state officials told the Los Angeles Times.
James R. Bolch, Exide's president and CEO, said the firm's "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.
"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 said it 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, the 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 company said. 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.
Meanwhile, Exide's global management team will continue to manage both the U.S. and global businesses.
Mr. Bolch explained that the company "has been burdened by a highly leveraged balance sheet which has limited our ability to competitively invest in our businesses. 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 in a press statement on the company's website, "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."
To help facilitate the company's financial restructuring, Exide said its board of directors has named Robert M. Caruso as chief restructuring officer. Mr. Bolch described Mr. Caruso as "a noted financial restructuring expert and a managing director of Alvarez and Marsal, a leading restructuring firm."
Mr. Bolch said as Exide moves forward with its restructuring, "the board concluded that we needed to have personnel with restructuring expertise on our executive team in order to implement critical objectives most effectively. We are very fortunate to have the benefit of the expertise, experience and demonstrated talent of Bob Caruso to take on the role of chief restructuring officer of Exide at this important time.
"He and the resources he brings from Alvarez and Marsal, will serve the company and all of its constituencies very well as we proceed with the job of restructuring Exide for the future."
The company has filed a variety of customary first-day motions seeking, among other things, authority to pay pre-filing wages, salary and benefits and to honor customer programs.
Exide said it also has set up two separate toll-free information lines: one for U.S. suppliers, 888-985-9831 and another for other interested parties, 855-291-0287.
Exide has operations in more than 80 countries that provide a comprehensive range of stored electrical energy products and services for industrial and transportation applications.
Waste & Recycling News, a Detroit-based sister publication of Tire Business, contributed information to this report.