Exide files for bankruptcy; Muncie plant for sale

MUNCIE, Ind. —  Exide Technologies has filed petitions for relief under Chapter 11 of the Bankruptcy Code, placed its assets up for sale, and notified the state of the potential closure of its Muncie battery-recycling plant.

“...Given the continued, unsustainable impact on our cost structure resulting from legacy liabilities in North America, and in light of the global economic COVID-19 slowdown that has amplified these pressures, a sale of our North American operations through a court-supervised process provides the best opportunity to continue delivering high-quality energy storage solutions and service to our customers," Tim Vargo, CEO of the global battery manufacturing company, was quoted as saying in a recent news release.

Exide is burdened with reportedly hundreds of millions of dollars of environmental liabilities across the country.

The Muncie plant, which provides about 180 jobs, is one of only two locations left in the United States where Exide still recycles spent lead-acid automotive, truck, golf cart, forklift, motorboat and other batteries.

A heavy metal, lead is particularly dangerous to children, and elevated levels of lead and arsenic can be found in the air and soil near facilities that recycle batteries.

Timeline:Three decades of Exide in Muncie

For now at least, the Muncie plant remains in operation, and it could continue to do so.

"It is important to note that the Chapter 11 filing Exide announced is to facilitate a strategic sale process of its North American assets," spokeswoman Melissa Floyd told The Star Press. "Exide is continuing to operate as usual and has obtained financing that will provide sufficient cash to support ongoing operations."

But in a recent Workers Adjustment Retraining and Notification Act (WARN Act) notice sent to the state, Exide said: "If the company does not enter into an agreement with a purchaser to sell the business, the company currently expects that it will be forced to conduct reductions-in-force or plant closings.

"Alternatively, if the company does enter into an agreement with a purchaser to sell the business, the purchaser may elect not to continue to operate the business as a going concern or to offer employment to all of the company’s employees.

"Accordingly, we are providing you today with conditional notice under the WARN Act and any related state law of a potential 'plant closing' or 'mass layoff' that may occur during the two-week period beginning July 21, 2020 or within two weeks thereafter, with possible additional layoffs continuing thereafter at 2601 W. Mt. Pleasant Blvd., Muncie, Indiana."

If such a closure or mass layoff occurs, the company expects that such actions will be 

permanent and will affect the entire Muncie facility. 

The notice lists about 180 jobs at Muncie, including 19 environmental staff; three heath and safety staff; and six baghouse (pollution control) operators; along with 24 furnace operators, 19 battery breakers/operators, 23 refinery operators, and a number of electricians, janitors, technicians, production operators/supervisors, clerks, yard drivers and other positions.

The company also notified Brad Plank, the chief elected official of Local 1048 of the International Brotherhood of Electrical Workers, of the potential layoffs/closure.

A bankruptcy court authorized Exide to pay employees in the usual manner and to continue their health and welfare benefits programs; to continue to manufacture and deliver product to customers; and to pay suppliers for goods and services provided to the company post-bankruptcy filing. The bankruptcy petitions were filed in the state of Delaware.

The court also approved on an interim basis  $40 million in "debtor-in-possession financing" from a group of lenders to provide enough cash to support ongoing operations in North America for the duration of the sale and restructuring.

Exide is loaded down with about $817 million in debt and hundreds of millions of dollars of environmental problems, The Wall Street Journal reported.

The company has closed battery recycling plants in Frisco, Texas; Vernon, Calif.; Reading, Pa., and Baton Rouge, Louisiana.

The bankruptcy court list of creditors who have the 30 largest unsecured claims includes the California Department of Toxic Substances Control ($10.9 million in regulatory fees and government obligations). Heritage Environmental Services, Cleveland, and Remediation Services, Independence, Mo., also appear on the list.

In February 2018, nearly 30 citizens — some with disposable dust masks strapped on their faces — marched down Mount Pleasant Boulevard  in front of the Muncie plant, where millions of lead-acid auto and other batteries are recycled every year.

The rally was staged after the Indiana Department of Environmental Management declined to hold a public hearing on Exide's application to renew its operating permit for another five years.

The demonstrators chanted calls for clean air, clean water, clean soil, environmental justice and testing.

One of them, environmental activist Deborah Malitz, on Monday told The Star Press: "We have no idea if they are going to close down. If they leave, who will be responsible for the cleanup, if there is a cleanup? That's one pressing question."

The lead reclaimed by the Muncie facility is used by other plants to manufacture new batteries. The company reports recycling more than 76,000 tons of lead per year in Muncie.

In addition to selling its North American business to the highest bidder, Exide's bankruptcy strategy includes selling its Europe, Middle East and Africa (EMEA) and Asia-Pacific business to its long-time lenders.

“We believe this is an attractive business, and we are already advanced in a robust marketing process that includes active engagement with a number of potential strategic and financial buyers,” Vargo, the company's CEO, said in the news release. “We are pleased with the interest to date and look forward to continued discussions about new ownership that will drive forward our businesses in North America, EMEA, and Asia-Pacific. I’d like to thank all of our employees for their unwavering commitment and hard work during this time of transition.”

Recycling batteries keeps lead from being illegally dumped, or disposed of in landfills, and it is a substitute for virgin raw material.

But Exide hasn't always operated according to state and federal air standards in Muncie.

For example, in 2015, the company agreed to pay an $820,000 civil penalty to settle a lawsuit accusing it of violating the Clean Air Act at its Muncie smelter.

The violations resulted in increased emissions of lead and particulate matter (soot), and might have resulted in increased emissions of total hydrocarbons, volatile organic compounds and dioxin/furans, according to the U.S. Environmental Protection Agency.

Contact Seth Slabaugh at (765) 213-5834 or seths@muncie.gannett.com