Exide Technologies announced that it is withdrawing the sale of its European Industrial Energy and Rest of World (ROW) operations announced earlier this year. In the Form 8-K filed on April 20, 2006, Exide announced that it had begun examining a number of strategic alternatives – including the potential sale of the company's European Industrial Energy operations.
"During the first quarter of FY �07, we evaluated a number of alternatives to increase profitability and maximize shareholder value, said Gordon A. Ulsh, President and Chief Executive Officer of Exide Technologies. "As a result of this process, we have decided not to proceed with the sale of our European Industrial Energy and ROW business, and instead intend to maximize the value of that business as part of our ongoing FY'07 Business Plan."
Exide also announced that it is planning to make a $75 million rights offering of common stock to its shareholders. The subscription price for the rights offering will be equal to 80% of the average closing price per share of the company's common stock for the 30 trading day period ending July 6, 2006, but it will not be higher than $4.50 per share nor lower than $3.00 per share.
The company has also entered into a standby purchase agreement with Tontine Capital Partners, L.P., Legg Mason Investment Trust, Inc. and Arklow Capital, LLC pursuant to which the investors have agreed to backstop the rights offering by exercising any rights remaining unexercised at the close of the rights offering and Tontine and Legg Mason have agreed to purchase at the rights offering subscription price additional shares for $50 million.
The agreement is subject to several closing conditions, including shareholder approval which will be sought at Exide's annual meeting scheduled to take place in August 2006. Because the company must register the rights offering with the Securities and Exchange Commission, no record date has been set yet. Further information is contained in the company's Form 8-K to be filed with the Securities and Exchange Commission.
The company will utilize the proceeds of the transactions to accelerate its restructuring plans and planned capital expenditures.
