Exide, bondholders struggle amid buyout interest

NEW YORK, April 2 Reuters reported that debt-strapped battery giant Exide Technologies is struggling to win concessions from creditors in the face of a looming $15 million interest payment due this month, while at least one buyout firm is considering making an offer for the company.

Exide, which became the world's biggest automobile battery maker through a series of acquisitions, is already in violation of lender covenants after its debt grew to $2.5 billion from an acquisition spree. Company officials admit that a Chapter 11 bankruptcy filing is one option under consideration.

While Exide advisors at Blackstone Group and Jay Alix & Associates strive to win concessions from lenders, some bondholders are organizing to demand a bigger say in the future of the company. The Princeton, New Jersey-based company denies it is leaving bondholders out of its debt discussions.

"They have not opened us to the process of what is going on," said one bondholder, who asked to remain anonymous. "We are attempting to engage them in a dialogue."

At least one private equity firm, New York-based Triton Partners, is considering a bid for Exide, according to people familiar with the situation. Officials at Triton, which manages $1.7 billion in distressed and high yield debt, declined to comment on any interest in the company.

However, Exide, a global battery maker that counts DaimlerChrysler , Kmart Corp. and NAPA as customers, is not looking for buyers, according to Joel Weiden, a company spokesman. "But if a proposal was made, we would evaluate it," he said.

Industry experts said any Exide takeover would likely require a major debt restructuring under bankruptcy court supervision. That process would likely mean bondholders and other creditors would eventually win control of the company in a debt-to-equity swap.

"This company is a train wreck waiting to happen," said one bankruptcy expert. "Creditors are getting ready for this company to file (for bankruptcy protection)."

Exide, which missed interest payments due last month, faces an additional $15 million debt payment on April 15. If the company cannot meet the payments, creditors may force the company into bankruptcy or demand other onerous measures. On Jan. 4, the company said lenders waived certain loan covenants until April 12.

Exide, which was delisted from the New York Stock Exchange on Feb. 11, posted a loss of $200.5 million in the third quarter of fiscal 2002, compared to earnings of $4 million in the fiscal 2001 third quarter. The company blamed its troubles on a high debt load from asset purchases and a slowing automobile industry.

Industry analysts said it's unlikely that Exide would be subject to a takeover offer by a competing company, since most public companies would be worried about negative investor reaction in buying a troubled company.

However, private equity firms, which typically buy companies and sell them in 3 to 5 years, are less subject to short-term public investor concerns.

Triton already has experience in distressed company situations. This week, it announced that it had spearheaded the sale of troubled textile maker CMI Industries to competitors. The sale allowed bondholders to regain back four times the amount of their claims prior to the company's bankruptcy filing last year, Triton said in a statement.