US battery maker Exide files for bankruptcy protection
10 Jun 2013
US battery maker Exide Technologies today filed for bankruptcy protection, the second time in a decade after losing business to competition and piling on debts of $1.1 billion.
The company, which had 2012 revenue of $3.1 billion, said that only its US operations, including the GNB Industrial Division, are included in the bankruptcy filing, while its international operations are excluded.
The 120-year old company plans to continue to operate globally during the reorganisation.
Exide said in its court filing that liabilities are at $1.14 billion and assets at more than $1.89 billion.
Georgia-based Exide blamed production costs, stiff competition and Europe's economic slowdown as the main reasons for filing for Chapter 11 bankruptcy protection.
"In recent years, competition in the battery industry has intensified, especially in the auto parts retail and mass merchandise channels where large customers are able to use their buying power to negotiate lower prices and longer payment terms, or move business elsewhere if their demands are not met," Exide said in the filing.
From 2010, Exide lost about $160 million in annual revenue after Wal-Mart Stores, one of its major customers then, opted for Exide's largest rival Johnson Controls as its sole supplier of transportation batteries.
James Bolch, president and CEO of Exide said, ''Our company has been burdened by a highly leveraged balance sheet which has limited our ability to competitively invest in our businesses. 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 US 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 has negotiated a $500-million debtor-in-possession (DIP) financing facility to be provided by a group of financial institutions and investors. 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.
Exide said that the DIP financing together with cash generated from daily operations and cash on hand will be used to fund post-petition operating expenses.
''Our restructuring,'' he continued, ''will allow us to strengthen our balance sheet and complete the operational changes that build upon the strategies that we have been pursuing. 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 employs around 10,000 people in more than 80 countries and supplies batteries under the Exide and NorthStar brands.
