Source: Dow Jones News Service, March 18, 2015
Posted on: http://envfpn.advisen.com
A Texas town wants to know if bankrupt battery maker Exide Technologies Inc. (XIDEQ) will stick to its promise to clean up land and water polluted by its now-shuttered lead recycling plant.
The city of Frisco, Texas, objected to Exide’s restructuring proposal Monday, seeking to force the company to clarify its plans for the remediation of contaminated land, ground water and nearby creeks.
Exide operated a lead recycling plant in Frisco for decades, and now the site of the facility is “riddled with environmental contaminants,” the city said in court papers. The plant ceased operations in 2012.
The city called the damage one of the most significant of Exide’s environmental liabilities and estimated remediation will cost approximately $35 million to $40 million in addition to post-closure costs of about $12 million.
Lawyers for Exide couldn’t be reached for comment Wednesday.
The city and Exide formed an agreement to clean up the site in 2012, but the city now says that Exide’s bankruptcy has delayed the implementation of that agreement. The city said in court papers that Exide has given no indication of whether it plans to complete remediation of the Texas property, even as a hearing to approve the company’s restructuring strategy approaches.
Exide’s restructuring proposal is scheduled to go before Judge Kevin Carey for final approval at a hearing on March 27.
Under the 2012 agreement with the city of Frisco, Frisco’s Economic Development Corp. and the Frisco Community Development Corp. would buy about 100 acres of land adjacent to the site of the former recycling plant from Exide for $45 million. In return, Exide would agree to clean up any environmental damage.
Should Exide ultimately reject that agreement, it will forfeit the $45 million, potentially a major source of funding the company could put toward remediation costs, the city said in court papers.
Another concern addressed in the city’s objection is Exide’s plans to close another battery recycling facility in Vernon, Calif., after striking a deal with the U.S. Department of Justice.
Closing the plant, which has been tagged as contaminated by California air and toxic substance control regulators, will cost Exide $15 million to $38 million in annual earnings before interest, taxes, depreciation and amortization, or Ebitda, according to a filing with the Securities and Exchange Commission. Exide will also pay about $50 million to clean up the site and nearby neighborhoods.
The loss of those earnings further jeopardizes Exide’s ability to pay for remediation at the Texas site, the city of Frisco said.
Exide filed for chapter 11 bankruptcy protection with about $1 billion in funded debt, including $675 million in secured bonds. In addition to financial backers, trade vendors owed more than $100 million await payment from the bankruptcy.
The current restructuring plan is designed to erase about $600 million worth of that debt, according to court papers.