The bank debt for bankrupt battery-maker Exide Technologies slumped this week from the low 60s with dealers quoting the market for the paper wide at 55-60. Pieces were said to have traded at 55 and 54, but those trades could not be confirmed. The latest trades occur as the Official Committee of Unsecured Creditors and R2 Investments go after liens to the assets and capital stock of Exide's foreign subsidiaries that were granted to the pre-petition bank debt holders. This credit is a good example why investors shy away from transatlantic deals, said one buysider. He also noted that the dragging out of the case was putting pressure on the name.
A week ago last Friday, the Official Committee of Unsecured Creditors and R2 filed a motion to examine the value of Exide's foreign subsidiaries and to analyze whether consolidation of the subsidiaries, which are not included in the bankruptcy proceedings, is warranted under the law. The committee and R2 claim that "the guarantees, stock pledges and liens granted by the non-debtor foreign subsidiaries in favor of [Credit Suisse First Boston] and the pre-petition banks in the months leading up to (and even after) the petition date" could potentially be avoided if the subsidiaries were consolidated. Call to counsel representing the Committee and R2 were not returned by press time.
The Committee and R2's current motion asks that the bankruptcy court order require CSFB, as the administrative agent to the lending group, to produce all documents it has regarding the requests and appear for a deposition. According to the filing, the bank group had roughly $700 million in bank debt outstanding, of which almost $292 million was made to the foreign subsidiaries. Calls to Biagio Vignolo, Exide's cfo, were referred to Craig Powell, a managing director in The Blackstone Group's restructuring & reorganization advisory group, who is working with the company. Powell referred calls to the outside counsel for the company, who did not return them.