More than $10 million of Exide Technologies' debt traded down to the 62-64 range this week from 66 earlier this month as the expiration of the company's covenant waivers approaches. The company has waivers on its financial covenants until April 12 and traders believe the company might opt to file for bankruptcy protection.
The battery maker's bank debt dropped roughly 10 points to the 66 level earlier in March from the mid 70s as investor grew worried about covenant resolutions. In its recent 10Q report the company 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" (LMW, 3/11). Joel Weiden, an Exide spokesman, said the company is still in the process of evaluating its options but would not comment on trading levels or the probability of a Chapter 11 bankruptcy filing.