Joel R. Glucksman
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201-896-7095 jglucksman@sh-law.comFirm Insights
Exide Technologies Officially Files for Bankruptcy Law Protection
Author: Joel R. Glucksman
Date: June 21, 2013
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After weeks of speculation, battery manufacturer Exide Technologies has officially sought bankruptcy law protection under Chapter 11 of the U.S. Bankruptcy Code.
Despite its recent attempts to cut costs, the company has been unable to strengthen its finances in light of rising costs for materials and the state’s shutdown of one of its key facilities in Vernon, California. The 125-year-old business filed for protection in the U.S. Bankruptcy Court in Wilmington, Delaware, listing debts of $1.14 billion and assets of $1.89 billion.
Exide, which manufactures lead-acid batteries used in cars, trucks, tractors, and boats in more than 80 countries, said the filing will only affect its U.S. operations. Its U.S. business was impacted heavily by the temporary closing of its Vernon facility, which was shut down on April 24 by the California Department of Toxic Substances and Control for state health violations. In its filing, Exide said the shutdown would cut $24 million from its earnings before taxes, interest, and depreciation, Bloomberg reports.
In addition, the company lost its contract with Wal-Mart Stores, Inc., in 2010, which reduced its sales by $160 million annually. Further, the company was nearing a deadline to pay $31 million in debt interest in August and $51.9 million worth of bonds maturing in September.
“Our restructuring will allow us to strengthen our balance sheet and complete the operational changes that build upon the strategies that we have been pursuing,” said James Bolch, Exide’s chief executive, according to the New York Times. “Over and above these efforts, we intend to become even more aggressive in reducing costs, taking actions with respect to underperforming business segments and to focus on the most attractive areas for future growth.”
Exide said it will continue to operate normally during Chapter 11 proceedings, and has secured $500 million in debtor-in-possession financing from JPMorgan Chase to maintain its operations.
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