Elliott Greenleaf Bankruptcy Alert - Exide Holdings, Inc.

Delaware Chapter 11: Exide Holdings, Inc.

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All Documents Can Be Accessed by Clicking the Case Title Immediately Above

CASE DETAILS

Link: Petition

On May 19, 2020 (the “Petition Date”), Exide Holdings, Inc. and four of its affiliates (collectively the “Debtors” and, together with their non-Debtor affiliates, “Exide” or the “Company”) each filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The Debtors are represented by Weil, Gotshal & Manges LLP as lead counsel and Richards, Layton & Finger as Delaware counsel. The case has been assigned to the Honorable Christopher S. Sontchi. A hearing on the Debtors’ first day motions was held on May 21, 2020.

ABOUT THE DEBTORS

Link: Affidavit in Support

Founded in 1888 and headquartered in Milton, Georgia, the Company is a global leader in stored electrical energy solutions and one of the world’s largest producers and recyclers of lead-acid and lithium-ion batteries, with operations in more than twenty countries. Through its four global business groups – Transportation Americas, Transportation Europe and Rest of World, Industrial Energy Americas, and Industrial Energy Europe and Rest of World – the Company provides a comprehensive range of stored electrical energy products and services for industrial and transportation applications. The Company manufactures and distributes transportation and industrial batteries in North America, Europe, Asia, the Middle East, India, Australia, and New Zealand. The Company has a diverse customer base that includes a number of major end-user customers, retailers and OEMs, utilities, and government and military agencies.

The Company currently employs approximately 7,621 employees, 5,183 of whom are employed by non-Debtor entities. Approximately 2,407 of the Company’s employees are located in the U.S. and approximately thirty-one are in Canada. The U.S. employees include 344 unionized hourly employees. One Debtor is a party to five collective bargaining agreements including the International Union of Electronic, Electrical, Salaried, Machine, and Furniture Workers (Local 86116); the International Brotherhood of Electrical Workers (Local 700 and Local 1048); and the United Steel, Paper, Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (Local 675 and Local 6996).

Since emerging from a previous chapter 11 case in 2015, the Company has experienced significant drains on its liquidity and cash flows, including mounting costs for environmental remediation and litigation related to certain sites, rising production costs exacerbated by the closure of two of its recycling facilities, operational inefficiencies caused by legacy mixed-use manufacturing facilities, and the recent impact of the global COVID-19 pandemic on consumer demand and supply-chain functionality. In the past two fiscal years, the Company has taken several measures to attempt to alleviate pressure on its liquidity and its ability to operate as a going concern. More specifically, the Company enacted certain operational initiatives, closed multiple mixed-use manufacturing facilities, reduced headcount, delevered its balance sheet and addressed near-term debt maturities, and reorganized its corporate structure to facilitate potential sales or financings of certain business segments as separate entities. However, the Company still faces significant operational and environmental challenges that prompted the filing of these cases, through which the Debtors intend to implement and complete a marketing process critical to maximizing creditor recoveries, providing for an equitable distribution to their stakeholders, and protecting the interests of their employees.

FINANCIAL CONDITION

As of the Petition Date, the Debtors, together with their non-Debtor affiliates, have outstanding funded debt obligations in the amount of approximately $817.4 million in the aggregate, of which $804,736,000 is identified as secured and $12,700,000 is identified as unsecured. The Debtors also state they have $11.1 million in aggregate outstanding capital lease financing obligations to Stonebriar Commercial Finance LLC for certain battery component manufacturing equipment, and BMO Harris Equipment Finance Company for certain battery manufacturing equipment. In addition, the Debtors estimate they have approximately $97.5 million in general unsecured claims, excluding any lease rejection claims. Additional information about the Company’s capital structure can be found on pp. 16-25 of the Affidavit.

DIP FINANCING AND SALE PROCESS

Link: DIP Motion

Three offers for financing were received, none of which were alone adequate to fund the marketing process. Ultimately, the Debtors were able to combine sources and secure postpetition financing in the form of a superpriority senior secured credit facility in an aggregate principal amount of $40 million to be provided by BTC Holdings Fund I, LLC and certain of the Debtors’ prepetition secured lenders and agented by Blue Torch Finance LLC, consisting of a $25 million first-out loan and a $15 million last-out loan.

The Debtors will seek bids or proposals for sale transactions that provide for a sale of substantially all of the Debtors’ assets, a sale of the Debtors’ Exide Americas business segments (the “Americas Sale Transaction”), a sale of the Debtors’ Exide Europe/ROW business segments (the “Europe/ROW Sale Transaction”), or the liquidation or winding up of any assets or businesses of the Debtors otherwise. An ad hoc group of the Debtors’ prepetition lenders has submitted a binding credit bid for the Exide Europe/ROW business segment, which will serve as the stalking horse for a Europe/ROW Sale Transaction and will be subject to higher or better bids.

Sale Milestones: