Prices on the bank debt of battery maker Exide Technologies dropped roughly 10 points last week as the expiration of covenant waivers nears and the market looks more closely at bankruptcy as a possibility for the company. At press time last week the company's bank debt had dropped to 66 with $10 million reportedly being flipped in the street. The company has waivers on financial covenants until April 12 and in its most recent 10-Q disclosed circumstances that could lead to credit default.
Joel Weiden, an Exide spokesman, said the company is "looking at a number of options for restructuring our financing." Although he admitted that Exide was considering both in- and out-of -court options, he said the bankruptcy assumptions are premature. Until last week, the debt had been trading in the mid 70s this year.
Dealers said last week that they expect to see the company file for bankruptcy. Bankruptcy rumblings are not new, but the company's 10-Q filing has fanned the flames on the topic. The report stated: "Due to its recent operating losses, cash flow constraints and continued weakness in the company's business markets, the company believes it is probable that upon expiration of the waivers, it will not be in compliance with certain financial covenants included in the company's senior facility."