Valence Technology equity holders seek official committee appointment

By Jim Witters

Wilmington, Del., Nov. 14 - An informal group of equity holders of Valence Technology, Inc. is seeking the appointment of an official committee of equity holders, according to a Nov. 14 filing with the U.S. Bankruptcy Court for the Western District of Texas.

The shareholders petitioned the U.S. Trustee in August for the formation of an equity committee, but the trustee decided not to appoint one.

The shareholders are asking the court to compel the trustee to form an equity committee.

"The unexpected bankruptcy filing resulted in the value of shares dropping to next to nothing," the filing states.

"Carl Berg controls this case. He is the chairman of the debtor's board of directors. He is also the managing member of the entity holding all secured debt. Standing alone, this simple conflict compels the appointment of an equity committee. Mr. Berg is also the holder of both preferred and common shares," the filing states.

At the petition date, Valence has about 170 million shares of common stock outstanding. The most recent 10-K reflects about $555 million in paid-in capital, according to the shareholders' request.

"Through his position as secured creditor, Carl Berg can use Valence's bankruptcy to wipe out all outsider equity, and leave himself with complete control of Valence. Therefore, even though Mr. Berg controls a significant percentage of the shares of the debtor, he cannot be expected to look out for the interests of other shareholders," the filing states.

The equity holders say that Valence filed for bankruptcy "when all indicators suggested an improving business, and after successful resolution of litigation that had previously clouded the value of the intellectual property. The trigger for filing was a default under a loan guaranteed by Carl Berg."

A hearing on the request is scheduled for Dec. 13.

Austin, Texas-based Valence Technology is a developer of lithium-ion batteries. The company filed for bankruptcy on July 12. The Chapter 11 case number is 12-11580.

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