Exide’s amended plan confirmed, DIP facility extended through April

By Kali Hays

New York, March 27 – Exide Technologies Inc. obtained confirmation of its amended plan of reorganization on Friday from the U.S. Bankruptcy Court for the District of Delaware, according to an order.

As previously reported, the plan disclosure statement was approved in early February and a majority of voting creditors had accepted the amended plan as of March 25.

A separate Friday order also allowed for the closure of Exide’s lead-acid battery smelting and recycling facility located in Vernon, Calif., which employs 137 workers.

Exide entered into a non-prosecution agreement with the U.S. Attorney’s Office for the Central District of California and agreed to a stipulation with the California Department of Toxic Substances Control “that provides a framework for the orderly closure and cleanup of the Vernon facility,” according to a prior news release.

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.

Under the plan support agreement, 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 plan deleverages the company by roughly $600 million providing for an “as-converted” net leverage ratio of 2 times.

The company also said the plan would 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.

DIP financing

In addition, Exide received approval from all of its lenders on a 12th amendment to its debtor-in-possession credit facility that includes a 30-day maturity extension and continued availability under the DIP revolver, according to an 8-K filed Thursday with the Securities and Exchange Commission.

Specifically, the maturity date of the DIP facility is extended to April 30 with the amendment and a plan confirmation order must be obtained by April 10.

Upon requesting the amendment, Exide told the lenders that the extension would allow it enough time to confirm a Chapter 11 plan and finalize an exit ABL revolver.

The amendment also prohibits repayment of the DIP term loan before repayment of revolver obligations and termination of the revolver commitments, adds a requirement for agent consent in addition to required revolver lender direction for enforcement of rights and the exercise of remedies and declares that reversal or termination of Exide’s confirmation order, backstop commitment or plan support agreement will constitute an event of default.

The company must pay a 20 basis points amendment fee to consenting lenders.

Exide Technologies, a Milton, Ga.-based maker and recycler of lead-acid batteries, filed for bankruptcy on June 10, 2013 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 13-11482.

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