Exide Technologies Inc. is proposing to exit bankruptcy largely being the property of senior secured noteholders, but some of those noteholders won’t be getting a slice of the reorganized battery company, which some believe could be sold for far more than the value assigned to it in estimates on file with the bankruptcy court, the Wall Street Journal reported today. Instead, senior secured noteholders who bought Exide’s debt will get something that they estimate is worth nothing or next to it because they don’t qualify as “accredited investors” under a definition established by the Securities and Exchange Commission and invoked by Exide. Generally speaking, the measurement is money, and investors that don’t have enough of it are believed to be “incapable of protecting or reasoning for themselves,” investor James Reise said in a letter to the U.S. Bankruptcy Court in Wilmington, Del. Exide filed for bankruptcy protection in that court in 2013 and has watched its bond prices suffer during struggles with regulators. Exide’s chapter 11 payout scheme has been tweaked so that not even very wealthy, well-advised accredited investors qualify for a cut of the equity. The distinction between people and institutions is becoming an issue for Exide’s chapter 11 plan confirmation, a March 27 court session that will test the legality of its restructuring strategy. (Subscription required.)
In related news, Exide Technologies has agreed to shutter its lead-acid battery recycling facility in Vernon, Calif., and pay $50 million in clean-up costs to avoid criminal prosecution for illegal storage of hazardous waste, Reuters reported yesterday. As part of a deal reached on Wednesday with the U.S. Attorney's Office in California's central district, Exide also admitted to storing lead-contaminated hazardous waste inside leaking van trailers on a number of occasions over the past two decades. Exide will "immediately and permanently cease" recycling operations at the plant, demolish the facility and clean up any groundwater contamination at the site and surrounding neighborhoods, according to the agreement.