Exide to Offer Stockholders Rights to Buy More Shares
Exide Technologies (XIDEQ), the maker of car batteries for retailers such as Wal-Mart Stores Inc., plans to offer its stockholders the right to buy as many as 14 million more shares to raise $91.7 million.
The proceeds will be used for operations, capital spending and restructuring, and possibly for acquisitions, the Alpharetta, Georgia-based company said in a statement today.
Exide, which exited bankruptcy in 2004, has posted losses in the past nine quarters. The company this month reported that its loss narrowed to $35.7 million for the fiscal first quarter that ended June 30, as sales rose 12 percent from a year earlier to $762.4 million. Exide sells lead-acid cars batteries to automakers as well as retailers.
The company's need for funds has ``grown in recent months because of sharply increasing lead prices,'' Standard & Poor's said in a statement. The offer will have no immediate effect on Exide's credit rating of CCC+, or seven levels below investment grade, S&P said.
For each share owned, investors will be able to buy 0.22851 share at $6.55 a share, Exide said. The offer is to holders of the stock as of Aug. 30 and will run through Sept. 28.
Tontine Capital Partners LP and Legg Mason Investment Trust Inc., Exide's two largest stockholders, agreed to buy shares under any rights that aren't exercised, the battery maker said.
Jeffrey Gendell, a general partner at Tontine, held 28 percent of Exide's shares as of June, according to data compiled by Bloomberg. Joseph Lash, a Tontine Associates LLC partner, joined Exide's board in March. Gendell declined to comment on the rights offer or Exide's agreement with Tontine.
Legg Mason owned 14 percent of Exide's shares.
Last year, Exide sold 21.4 million shares to its stockholders at $3.50 each in a rights offering, raising about $75 million. The company had 61.3 million shares outstanding as of Aug. 3, according to Bloomberg data.
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