Exide looking at in-court, out-of-court restructuring, noteholders could see "substantial" losses

New York, Feb. 19 - Exide Technologies said it is looking at both in-court and out-of-court alternatives to restructure its outstanding debt and warned that holders of its senior notes and convertibles subordinated notes could suffer "substantial" losses.

The Princeton, N.J. battery company said it is required to present a preliminary five-year business plan to its senior lenders by Feb. 28.

Exide said in a filing with the Securities and Exchange Commission that as part of that plan it is looking at a number of alternatives.

"Management believes that under any restructuring scenario, the company's common stock would likely be subject to massive dilution as a result of the conversion of debt to equity or otherwise," the company said in the filing. "In addition, the company's senior notes and convertible subordinated notes could suffer substantial impairment in a restructuring."

As previously disclosed, the company hired Jay Alix Services LLC to help with its restructuring and named Lisa Donahue, a principal at Jay Alix, as its chief financial officer and chief restructuring officer. The company is also working with The Blackstone Group to assist management in evaluating its capital structure and related strategic alternatives.

Alongside the five-year business plan, Exide said it is also developing short-term plans designed to improve cash management, including reduced spending, rationalization of facilities, utilization and effectiveness of support services and refining material purchasing and overall inventory management.

Exide said in the SEC filing that it is currently operating under a waiver of non-compliance with financial covenants from its bank lenders. That waiver runs through April 12, 2002. As part of the waiver, the company gave its senior lenders additional security interests. Exide warned it is "probable" it will not be in compliance with the covenants when the waiver expires.

Because of downgrades to CCC from B- by Standard & Poor's and Caa2 from B3 by Moody's Investors Service, the counterparty to Exide's domestic receivables sale facility has said it has the right to terminate such facility, the company said. However, rather than terminating the facility the counterparty has put it on daily rather than monthly settlement.

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