A large holder of Exide Technologies bank debt sold a $125 million piece in the 78 range due to the uncertainties surrounding the outcome of the company's bankruptcy case. Angelo Gordon & Co., BlackRock, Citadel Investment Group and R2 Investments had been large holders of the company's bank debt early in the bankruptcy process. One source familiar with the trade identified the seller among that list. The buyer of the stake could not be determined. The exact levels at which those firms bought in could not be ascertained, but most were believed to be in when the debt was trading in the 50s.
The bankruptcy court judge recently denied the confirmation of Exide's reorganization plan (LMW, 1/12). The seller most likely decided that 80 cents on the dollar was a good price to sell down some of its exposure, speculated one buysider. But the sale of the stake may have come too soon. While the paper was quoted in the 781/2-80 range following the trade, it soared to the 84-85 context later last week after Exide's creditors discussed the terms of a new consensual plan of reorganization at a hearing. Exide announced that it had reached an agreement in principal with the steering committee for its lenders and its unsecured creditors, explained a company spokesman. Under the new plan of reorganization, lenders will receive 90% of the equity and unsecured creditors will receive 10% of the equity plus warrants. The spokesman declined to comment on the exact terms of the recovery package.
Although bank-debt holders are reported to be receiving less of a recovery package under the latest plan of reorganization, lenders are relieved by the decision, said one trader. The Creditors Committee had initiated an adversary proceeding against the pre-petition lenders, claiming that the lenders forced the company to provide them with extra collateral. An attempt to settle that claim was incorporated into the company's plan of reorganization. But when the judge decided to deny the confirmation of Exide's reorganization plan, a major point of contention was the settlement attempt to the claim. That decision--as well as the judge's ruling on Exide's enterprise value--ultimately sent creditors back to the negotiation table. Calls to Ian Harvie, interim cfo, v.p. and corporate controller for Exide, and an attorney representing the company were not returned by press time.