Li-ion manufacturer Ener1, Inc. has initiated a pre-packaged Chapter 11 bankruptcy case to implement a restructuring plan agreed on by its primary investors and lenders. Ener1 says the plan will significantly reduce its debt and provide up to $81 million to recapitalize itself to support its long-term business objectives and strategic plan.
In 2009, Ener1 subsidiary EnerDel received $118.5 million in federal grant funding under the stimulus package.
Ener1 filed its Chapter 11 case in US Bankruptcy Court in the Southern District of New York, in which it is requesting that the Court confirm the pre-packaged Plan of Reorganization to implement the restructuring. The Company filed a proposed Disclosure Statement and Plan of Reorganization with the Court and anticipates completing the restructuring process in approximately 45 days.
None of Ener1’s foreign or domestic subsidiaries has initiated reorganization cases, and are not expected to be adversely impacted by the legal proceedings. The restructuring plan provides for the continued normal operation of the subsidiary businesses, including EnerDel, EnerFuel, NanoEner, Emerging Power and Ener1 Korea, all of which will honor their customer commitments and will continue to pay their suppliers for goods and services as usual. Ener1 said its operating subsidiaries do not plan to reduce employment levels as a direct result of the filing, although they will continue to monitor market conditions and make adjustments to the workforce as appropriate.
The pre-packaged restructuring plan provides for a restructuring of the long-term debt and the infusion of up to $81 million of equity funding, which will support the continued operation of Ener1’s subsidiaries and help ensure that the restructuring will not adversely impact their employees, customers and suppliers.
Of this amount, a new debtor-in-possession (DIP) credit facility of up to $20 million will be available upon Court approval to support working capital needs during the restructuring. The balance, for a total of up to $81 million, will be available over the four years following Court approval of the restructuring plan and subject to the satisfaction of certain terms and conditions.
In addition to the restructuring of long-term debt, the claims of Ener1’s general unsecured creditors will be unimpaired and paid by the Company under the restructuring plan. Under the plan, all of Ener1 existing common stock will be canceled, the long-term debt holders will be receiving a combination of cash, a new term loan and new common stock in exchange for their claims, and new preferred stock will be issued to the provider of the post-petition and exit funding.
Suppliers to the Company will be paid under normal terms for goods and services provided after the Chapter 11 filing date. Payments for goods and services provided directly to the Company prior to the filing date have been previously settled or will be paid pursuant to the restructuring plan when it is approved by the Court.
On 12 December 2011, Ener1 common stock was delisted from NASDAQ. Pursuant to the plan, that common stock will be extinguished at the conclusion of the reorganization case and current equity holders will not receive any distributions.
Ener1’s legal advisor is Reed Smith LLP and its financial advisor is Houlihan Lokey Capital, Inc.