Exide Technologies' bank debt dropped to the 93 context and settled around 95-96 as the company announced it is seeking amendments to its $365 million credit facility. The battery producer expects to violate minimum EBITDA and leverage covenants for 2005. The debt was quoted around par in the beginning of the week.
Exide's $600 million exit loan is led by Deutsche Bank and Credit Suisse First Boston. The facility consists of a $100 million multi-currency revolver, a $172.5 million U.S. term loan, a £127 million term loan and a $172.5 million foreign term loan. The deal went into effect as the company emerged from bankruptcy in May 2004 after filing in April. The deal is priced at LIBOR plus 3 1/2%. An Exide spokesman did not return calls.
The company's bonds tanked. Its 10 1/2s of '13 fell to around 74 mid-week. The announcement spurred chatter the credit may be forced to re-enter bankruptcy and not surprisingly left bondholders disgruntled with the company's disclosure. "That's a disaster. It could easily be a Chapter 22," commented one high-yield portfolio manager, who noted he was staying away from the credit, which recently emerged from bankruptcy. Ron Bringewatt, managing director of research at New York distressed dealer The Seaport Group, said while bankruptcy doesn't seem an impossibility because the company has filed for Chapter 11 before, the bonds may be oversold on bondholders' disgust at the earnings miss so soon after debt issuance.