Exide files plan, disclosure based on noteholder support agreement

By Caroline Salls

Pittsburgh, Nov. 18 – Exide Technologies filed its plan of reorganization and related disclosure statement with the U.S. Bankruptcy Court for the District of Delaware.

According to a company news release, the plan and statement are consistent with the terms of plan support agreement and term sheet Exide entered on Nov. 4 with holders of a majority of the principal amount of its senior secured notes.

The company said there is substantial support among the noteholders for entry into a definitive backstop agreement for the $175 million of new capital included in the plan. Exide said it continues to negotiate the terms of that agreement.

Exide said its goal is to emerge from Chapter 11 bankruptcy by March 31.

As previously reported, the support of the company’s senior secured noteholders, who also hold a substantial majority of Exide’s estimated $360 million debtor-in-possession credit facility’s term loan, will result in the deleveraging of the company by more than $600 million, allowing Exide to emerge from Chapter 11 bankruptcy substantially in its current form, operating across all of its existing business segments.

Plan terms

Under the proposed plan, some of the noteholders have agreed to convert at least $100 million of their DIP facility claims into new second-lien convertible debt and roll the balance of their DIP loans into a new exit term loan. The plan also contemplates a new $175 million capital commitment to be raised in a rights offering made available to eligible holders of the debtor’s pre-bankruptcy 8 5/8% senior secured notes.

The new second-lien convertible debt would be convertible into 80% of the equity in the reorganized company. After conversion, senior secured noteholders would receive 15% of the equity in the reorganized company. The rest of the equity will be used to pay fees.

Treatment of general unsecured claims and subordinated claims is to be determined.

Existing equity interests would be cancelled, released and extinguished, and the holders would receive no distribution.

Exide said the plan will be funded with cash from operations and the debt issuances.

Debt details

Funded debt at Chapter 11 emergence will total $571 million, which will be comprised of $264.1 million of first-lien notes, $283.8 million of second-lien convertible notes and $23.1 million of local European debt.

According to the disclosure statement, the company’s debt at emergence will also include an estimated $225 million exit ABL revolver facility.

A total of $246.8 million of DIP term loan claims will be exchanged for $259.1 million of five-year first-lien high-yield 11% notes, inclusive of an original issue discount of 5% for every $100 of term loan claims.

The company said 4% of the first-lien notes interest will be paid in cash, and 7% will be paid in kind.

Meanwhile, reorganized Exide will issue $283.8 million in second-lien convertible notes, consisting of $175 million of capital raised under the rights offering, $100.0 million in exchange of DIP term loan claims and $8.8 million of fees to backstop commitment parties.

Holders of DIP term loan claims will have the option to exchange up to $100 million of claims into second-lien convertible notes. The interest rate will be 7%, paid in kind.

The convertible notes will mature in 2025, with two five-year extension options.

Exide Technologies, a Milton, Ga.-based maker and recycler of lead-acid batteries, filed for bankruptcy on June 10, 2013. Its Chapter 11 case number is 13-11482.

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