Exide Technologies court supports amended plan disclosure statement

By Kali Hays

New York, Feb. 5 – Exide Technologies, Inc. received approval of the disclosure statement related to its amended Chapter 11 plan of reorganization, according to a Feb. 4 order from the U.S. Bankruptcy Court for the District of Delaware.

A hearing to confirm the plan is scheduled for March 27.

As previously reported, the reorganization plan is based on Exide’s plan support agreement with a majority of senior secured noteholders, a backstop commitment agreement and a settlement agreement with its official committee of unsecured creditors.

The plan support agreement calls for holders of debtor-in-possession financing claims to convert at least a set portion of their claims into new second-lien convertible notes and to backstop the exchange of DIP loan claims into second-lien notes to ensure that $100 million of DIP financing claims convert into new second-lien convertible notes.

Exide said the proposed plan deleverages Exide by roughly $600 million to provide for an “as-converted” net leverage ratio of 2 times.

The company said the plan would also allow it to emerge from Chapter 11 substantially in its current form – operating across all of its existing business segments.

Proceeds from the rights offering, together with availability under a new exit revolving credit facility, are expected to provide the company with at least $225 million in liquidity at exit and be used to fund a five-year business plan after emergence.

Specifically, Exide said this funding will give it liquidity and working capital to support its seasonality and business growth, capital improvements and environmental, health and safety investments.

Backstop agreement

In January, Exide and some holders of its senior secured notes executed a commitment to backstop up to $160 million of second-lien convertible notes to be offered to noteholders in an up to $175 million rights offering in Exide’s proposed plan of reorganization.

As consideration for the rights offering commitment, the backstop commitment and other agreements of the backstop parties, Exide will pay a nonrefundable backstop equity fee in the form of 5% of the new common stock issued on the plan effective date plus a backstop notes fee payment equal to 15% of the total commitment amounts.

The company said it will satisfy its obligation to pay the backstop notes fee through the issuance of additional second-lien convertible notes equal to 10% of the total commitment amounts in lieu of any cash payment.

The total principal amount of new second-lien convertible notes and the total principal amount of first-lien high-yield notes to be issued in satisfaction of the backstop notes fee will be equal to $16 million and $8 million, respectively.

At the election of a backstop party, Exide’s obligation to deliver fee notes in the form of new second-lien convertible notes may be satisfied by additional original issue discount for the second-lien notes to be purchased by the backstop party provided, however, that any election to receive original issue discount will in no event reduce the proceeds actually funded to Exide by the backstop parties below $160 million.

Plan terms

Treatment of claims under the proposed plan include the following:

• Holders of eligible senior notes will receive a proportionate share of 10% of the new Exide common stock after giving effect to conversion of the new second-lien convertible notes and the right to participate in the rights offering;

• Holders of alternative distribution senior notes will receive a proportionate cash distribution and a proportionate share of deferred payments;

• Holders of other secured claims will have a class B claim reinstated and be paid in full in cash an amount equal to the claim during a period not to exceed seven years including accrued interest, or receive collateral securing a reinstated claim;

• Holders of other priority claims will be paid in full in cash;

• Holders of general unsecured claims and subordinated notes claims will receive a proportionate share of GUC trust assets;

• Holders of intercompany claims will be either reinstated or discharged at the discretion of the reorganized company on the effective date of the plan; and

• Holders of other subordinated claims will receive no distribution and all outstanding interest in Exide will be automatically cancelled on the plan effective date.

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.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.