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 act as workhorses in sale of EMEA and Asia-Pacific businesses with $ 430 million credit offer | Daily updates from bankrupt businesses

0


May 19, 2020 – Exide Holdings, Inc. and four Affiliate Debtors (“Exide” or the “Debtors”) filed for Chapter 11 protection with the US District Bankruptcy Court of Delaware, Master File Number 20 -11157. The debtors, a global provider of stored electrical power solutions, are represented by Daniel J. DeFranceschi of Richards, Layton & Finger, PA. Other assignments authorized by the board of directors include (i) Weil, Gotshal & Manges LLP as general counsel in bankruptcy, (ii) Ankura Consulting Group, LLC as financial advisers, (iii) Houlihan Lokey Capital, Inc. as Investment Banker and (iv) Prime Clerk as Claims Agent.

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

Past bankruptcies

This is the second Chapter 11 debtors filing in seven years and the third in less than 20 years. In June 2013, debtor Exide Technologies, LLC went through two difficult years in bankruptcy (main case Delaware 13-11482, the “2013 Chapter 11 case”). .and finally emerged after reducing their balance sheet by about $ 600 million; raised approximately $ 165.0 million in new capital; and secured an ABL exit financing facility of $ 200.0 million. Debtors emerged from their first Chapter 11 in April 2004 (it’s too long a two-year process).

Unlike their first two Chapters 11, however, the debtors have no intention of pursuing a recapitalization transaction to emerge as a reorganized company and speed will clearly be essential when they continue to sell. With respect to all assets that the Debtors are unable to sell to third party buyers, the Debtors intend to liquidate or abandon those assets.

Press release filing

In a Press release Announcing the filing, the debtors “announced a comprehensive strategy to best position its business in North America, EMEA and Asia-Pacific for the benefit of its employees, customers, suppliers and other stakeholders around the world. This strategy aims to restore the liquidity of the Company, which had deteriorated further due to the unprecedented global health and economic impact of the COVID-19 pandemic, while the Company continues to sell its assets.

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

Restructuring support agreement

Exide has entered into a Restructuring Support Agreement (the “RSA”, see File No. 14, Exhibit C) under which an ad hoc group of the Company’s noteholders (the “ad hoc group”) will serve as workhorse for credit offers in a sale of EMEA and Asia-Pacific accounts receivable. The agreement includes a “go-shop” period with a deadline for the submission of bids and auctions to be held in early July 2020.

As part of the RSA, the Ad Hoc Group submitted a binding condition sheet (appended to the RSA) containing certain key terms regarding their “Europe / ROW Credit Offer” of $ 430.0 million. As part of the Europe / ROW credit offer, the Ad Hoc Group has also committed to (i) provide initial interim financing of $ 25 million to Exide International which will be used for working capital and objectives. overheads within the Exide Europe / ROW business segment, and up to $ 50.0 million in fresh cash outflow funding at their discretion (collectively, the “Bridge Funding Facility”) and (ii) refinance all amounts owed by non-debtor Exide Technologies (Transportation) Limited under the ABL Credit Agreement.

DIP financing

Exide has secured a $ 40.0 million Debtor in Possession Funding Commitment (“DIP”) to be provided by BTC Holdings Fund I, LLC and certain of the Secured Lenders prior to the Debtors’ (“DIP Lenders”) request. and managed by Blue Flambeau Finance LLC. A copy of the term sheet containing some key terms of the DIP Facility is appended to the RSA.

Main shareholders

  • Mackay Shields LLC: 39.83%
  • Alliancebernstein LP: 19.12%
  • FROM Shaw Galvanic Portfolios, LLC: 10.76%
  • Neuberger Berman Group LLC: 6.38%

Events leading to the filing of Chapter 11

In a statement in support of the Chapter 11 filing (the “Messing Statement”), Roy Messing, the Director of Debtor Restructuring, detailed the events leading up to Exide’s Chapter 11 filing. Messing’s statement states: “Even after it emerged from bankruptcy in April 2015, the business of the company continued to face significant operational challenges, substantial environmental costs and severely constrained industry trends. its liquidity.

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

The operational shortcomings in turn led to insufficient cash flow to service the level of debt with which Debtors exited Chapter 11 of 2013 and which continued to grow as Debtors funded the remission expenses. condition of facilities and capital investments. As at March 31, 2020, the Company’s indebtedness was approximately 9.2 times EBITDA as debt service charges limited the ability of accounts receivable to invest in product and growth initiatives. .

Debtors also have significant environmental obligations and liabilities that “could cost an additional $ 200 million or more to settle over the next five years.”

Anticipated debt

At the time of filing, the debtors, along with their non-debtor affiliates, had debt obligations outstanding totaling approximately $ 817.4 million, summarized in the following table:

Instrument / Installation

Principal Exceptional

ABL credit agreement

$ 101,200,000

10.75% Superpriority Lien Senior Secured Notes due 2021

$ 152,513,000

Priority 11.0% notes due 2024

$ 390,000,000

11.0% of Senior Secured Notes due 2024

$ 161,023,000

Total secured debt

$ 804,736,000

3.79% Deferred Payment Notes due 2022

$ 2,700,000

11.0% of unsecured notes due 2020

$ 9,000,000

11.0% of unsecured notes due 2022

$ 1,000,000

Total unsecured funded debt

$ 12,700,000

Total

$ 817,436,000

About debtors

According to the debtors: “For more than 130 years, Exide Technologies, LLC (exide.com) has been advancing the world as a global provider of stored electrical power solutions for the transportation and industrial markets. Based 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 specialized applications for the transportation, grid power and motive power markets and industries, including agriculture, automotive, electricity, light and heavy trucks, navy, material handling, military, mining, energy. sports, railways, security, telecommunications, utilities, and uninterruptible power supply (UPS), among others. As one of the largest secondary recyclers in the world, the company is committed to environmental sustainability.

The Messing statement 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) country. The Company is headquartered in Milton, Georgia and through its four global business groups – Transport Americas, Transport Europe & Rest of the World (“ROW”), Industrial Energy Americas and Industrial Energy Europe and ROW – the Company provides a complete line 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.

Company structure table (see Annex A of the Messing declaration)

Read more Bankruptcy News



Source link

Share.

Leave A Reply