Valence disclosure statement approved; confirmation hearing Oct. 30

By Jim Witters

Wilmington, Del., Sept. 23 - Valence Technology, Inc. received approval for the disclosure statement for its Chapter 11 plan of reorganization, according to a Sept. 23 filing with the U.S. Bankruptcy Court for the Western District of Texas.

The plan, filed Aug. 21, was developed after negotiations with Valence's creditors.

The plan confirmation hearing is scheduled for Oct. 30.

Plan terms

The plan terms include the following:

• An infusion of $20 million of new capital, which will be raised through an exit loan funded by pre-bankruptcy secured lender Berg & Berg Enterprises, LLC and which will fund the payments to creditors and the reorganized company's working capital needs;

• The maturity date of $19.1 million of the $69.1 million total pre-bankruptcy secured debt owed to Berg & Berg will be extended under a new note;

• The debt evidenced by the new loan and the new note will continue to have the first-lien security interests and first-lien priorities originally granted to Berg & Berg, but payment of the new loan and the new note will be subordinated to payment of the claims of a number of junior classes, including general unsecured creditors;

• The exchange of the remaining $50 million of Berg & Berg's secured claim for 100% of the new equity in reorganized Valence;

• Payment in full in cash over time of the cure payments owed to Tianjin Lishen Battery Joint-Stock Co., Ltd. under a Nov. 9, 2012 bankruptcy court order;

• Payment in full of unsecured claims of $500 or less;

• Payment to general unsecured creditors of a share of $1.1 million on the plan effective date and $1.1 million on the one-year anniversary of the effective date;

• Payment of $1.51 million on the effective date and $1.51 million on the one-year anniversary of the effective date in satisfaction of the unsecured claim of Carl Warden; and

• Cancellation of existing equity interests with no distribution to interest holders.

At the plan effective date, the reorganized Valence will enter into a new $20 million exit loan agreement with Berg & Berg.

Austin, Texas-based Valence Technology is a developer of lithium-ion batteries. The company filed for bankruptcy on July 12, 2012 under Chapter 11 case number 12-11580.

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