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S&P Places Exide Ratings on Watch Negative

6 August 1998

S&P Places Exide Ratings on Watch Negative Re:Recap

    NEW YORK--Standard & Poor's CreditWire 8/5/98-- Standard & Poor's today placed its double-'B'-minus corporate credit, single-'B'-plus senior unsecured debt, and single-'B' subordinated debt ratings on Exide Corp. on CreditWatch with negative implications. About $1.2 billion of total debt is outstanding.
    The CreditWatch placement follows the company's announcement that its Chairman and Chief Executive Officer, Arthur M. Hawkins, has advised the company that he and the company's senior executives are studying the feasibility of a recapitalization of the company to be led by senior management and a third party sponsor. The CreditWatch placement reflects Standard & Poor's concern that such a recapitalization could cause an increase in debt leverage at the already highly leveraged company.
    Exide is a leading supplier of automotive batteries in North America and Europe. The company also produces industrial batteries in Europe. The company has expanded dramatically over the past few years through a series of debt-financed acquisitions in Europe. As a result of this acquisition activity, the company is highly leveraged. Debt to capital (adjusted for operating leases and accounts receivable sales) at fiscal year end was about 83%, and funds from operations to debt was about 14%. Current ratings had incorporated the expectation that operating performance would improve steadily over the next few years and lead to an improvement in cash flow protection measures and a decrease in debt leverage.
    Standard & Poor's will monitor events at the company and assess the impact of any recapitalization plans proposed. An increase in debt leverage or decrease in cash flow protection measures could lead to rating downgrades.---CreditWire