Seeking Alpha

Exide Technologies (XIDE -16.3%) is preparing to file for potential bankruptcy protection by...

Exide Technologies (XIDE -16.3%) is preparing to file for potential bankruptcy protection by this summer, WSJ reports. Any filing likely wouldn't include XIDE's European operations, which account for more than half the company's revenues. XIDE carries ~$700M in debt, and there's concern it won't be able to repay a ~$56M convertible note due in September.
Comments (9)
  • Information Overload
    , contributor
    Comments (59) | Send Message
     
    Forgive my ignorance but how can bankruptcy not affect operations in Europe?
    6 Jun 2013, 05:06 PM Reply Like
  • stealthology
    , contributor
    Comments (312) | Send Message
     
    Someone smart please explain. If they file bankruptcy, all common stock holders get wiped out, correct? Or would this be a special type of partial bankruptcy where their shares would still be active?
    6 Jun 2013, 05:27 PM Reply Like
  • Ranma
    , contributor
    Comments (1648) | Send Message
     
    Subsidiaries don't file separate cases. They are assets subject to sale, transfer, liquidation, etc.
    6 Jun 2013, 06:27 PM Reply Like
  • Information Overload
    , contributor
    Comments (59) | Send Message
     
    Thanks for you response. So when the WSJ article says:
    "Any Chapter 11 filing isn't expected to include the company's European operations, a person familiar with the situation said. These operations account for more than half of the company's revenues."

     

    What is the implication?
    6 Jun 2013, 06:30 PM Reply Like
  • cdhames
    , contributor
    Comments (2) | Send Message
     
    They may be referring to spinning off their European assets as a slimmer, debt free company. US assets and all of the issues associated with them would remain as is. That would explain why they need until summer.

     

    Until we know more it's just speculation, but that would be my guess.
    7 Jun 2013, 01:43 AM Reply Like
  • Ranma
    , contributor
    Comments (1648) | Send Message
     
    Each bankruptcy case is different, so it depends what entity holds the assets and liabilities. I don't know about Exide's corporate structure, but assuming the Euro operations are a wholly owned sub, then it means absolutely nothing.
    6 Jun 2013, 06:38 PM Reply Like
  • stealthology
    , contributor
    Comments (312) | Send Message
     
    "Means nothing" - can you explain?
    7 Jun 2013, 02:52 AM Reply Like
  • Ranma
    , contributor
    Comments (1648) | Send Message
     
    It means that the WSJ had no reason putting that line in about the Euro ops. The parent company will file BK, and just because Euro ops don't file a separate one, doesn't mean that the Euro op is immune to anything that happens as a result of the case. Nor is it protected from the parent company's creditors.
    8 Jun 2013, 12:40 AM Reply Like
  • vivamelgar
    , contributor
    Comments (6) | Send Message
     
    I think it boils down to the following...regardless of how they prepare the BK package if they officially announce BK I am almost certain that common stockholders will be wipe out. The carcass will be shared by senior bond holders.

     

    I would like to comment about the article itself, first of all the "potential" and "may" file bankruptcy is not a sure thing at this point, even though I have to accept that WSJ is a serious publication and they must have done their due diligence to print such a damaging article, possible solutions for the longs are:
    1) White knight buys the company
    2) Company rejects that is preparing for BK.
    3) Company indicates that will sell assets raise capital etc to stay afloat avoiding BK.
    All these and other options that avoid BK are still a real but have to admit that with every day that goes by are more distant, management has chosen to keep quite and to concede so far, which is not a good indication.
    9 Jun 2013, 08:19 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|