Exide Technologies, the 125-year-old battery maker, won initial court approval to borrow as much as $500 million to replace older loans and stay in business while it reorganizes in bankruptcy.
About $225 million of the new debt will go to pay off and replace a $160 million revolving credit line, with any money left over used for operations, according to court papers. The other $275 million will be partly supplied by a group of noteholders that holds 45 percent of the company’s bonds that mature in 2018.
The new loans “are a strong endorsement of the company’s efforts to restore itself to profitability as a going concern,” the company said in papers filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware.
Exide, based in Milton, Georgia, filed for bankruptcy yesterday after state regulators shut down the company’s lead-recycling plant in Vernon, California. The April closing forced Exide to speed up its restructuring plans by hiring law firm Skadden, Arps, Slate, Meagher & Flom LLP and financial adviser Alvarez & Marsal North America LLC, according to court records.
With today’s interim approval by U.S. Bankruptcy Judge Kevin Carey, the company will get access to about $170 million of the new debt. The rest of the loans can’t be disbursed unless Carey gives final approval after allowing creditors to object at a hearing to be scheduled in coming weeks.
The company’s 8.625 percent bonds closed down more than 3 percent to 56.25 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
This is Exide’s second trip through bankruptcy. The company reorganized in 2004, winning court permission to eliminate $1.3 billion in debt in exchange for giving lenders about 90 percent of its stock. The other 10 percent went to unsecured creditors.
Carey also presided over the first bankruptcy filing.
The case is In re Exide Technologies, 13-11482, U.S Bankruptcy Court, District of Delaware (Wilmington).