Exide Technologies has hired Lazard investment bank to advise on financial restructuring to benefit all stakeholders. Its the stock price slid 48% in reaction to the announcement – its biggest one-day decline since April 2004. The company’s stock value has dropped 60% so far this year.
The share price closed at US$1.37 on 4th April 2013 after the announcement but jumped back 31% the next day to US$1.80. The current Exide (XIDE) stock price on NASDAQ is US$1.43.
Exide has US$55.8million worth of bonds that are due to be repaid to stockholders this year but with finances falling experts are concerned the company will not be able to fulfil this obligation. Exide has approximately US$20 million more in its free cash flow than it estimated in December 2012.
The company was ordered by Los Angeles City Council to address pollution concerns at its smelter in Vernon, CA. This news directly affected its share price, leading to the overnight drop, which in turn led to an investigation by Harwood Feffer LLP as to whether the company breached its fiduciary duties to shareholders.
The company will not make any announcements on the restructuring until the process is complete.