Exide Technologies, a battery maker based in Milton, Ga., has filed for voluntary Chapter 11 bankruptcy reorganization as it attempts to restructure its U.S. business and strengthen its balance sheet.
Only Exide Technologies' United States' operations, including the GNB Industrial Division, are included in the filing. Exide Technologies' international operations are excluded from the filing. The company plans to continue to operate globally without interruption during the reorganization.
The filing was made Monday in U.S. Bankruptcy Court in Delaware. A highly leveraged balance sheet, combined with a surge in materials cost, led to the action.
"Operations both in the U.S. and in the rest of the world will continue to serve customers in a timely manner," said James R. Bolch, president and CEO of Exide. "All post-filing obligations to U.S. suppliers will be paid on time and within terms. We intend to pay U.S. employees as usual and do not expect any material changes to their benefits. Outside of the U.S., obligations to employees and suppliers will not be impacted by the filing."
Exide has negotiated a $500 million debtor-in-possession financing facility to be provided by a group of financial institutions and investors in connection with the filing.
Once approved by the court, this financing will enhance the company's global liquidity position with approximately $300 million in new capital, in order to allow it to pursue its restructuring goals. The proceeds of the DIP financing together with cash generated from daily operations and cash on hand will be used to fund post-petition operating expenses.
Exide's global management team will continue to manage both the U.S. and global businesses.
"Our company has been burdened by a highly leveraged balance sheet which has limited our ability to competitively invest in our businesses," Bolch said. "Recently, our profitability has been impacted by unprecedented increases in our product costs -- driven primarily by the market price of scrap lead in North America – as well as operational challenges in the U.S. and Europe which we have been unable to fully offset. After a great deal of consideration, we concluded a restructuring of our balance sheet and our operations was the best path forward for the company."
Exide's board of directors has named Robert M. Caruso as chief restructuring officer. Caruso is a financial restructuring expert and a managing director of Alvarez and Marsal, a leading restructuring firm.
Exide has also set up two separate toll-free information lines: one for U.S. suppliers, 888-985-9831 and another for other interested parties, 855-291-0287.
