(Reuters) - U.S. battery maker Exide Technologies filed for Chapter 11 bankruptcy protection early on Monday, court documents showed, with the aim of cutting debt and implementing a restructuring plan to better compete in the market.
Exide, which makes lead-acid batteries, said in the court filing that a combination of rising production costs, intense competition and the economic downturn in Europe had led to liquidity constraints.
Also, higher spent-battery costs and lead-related price increases have put pressure on the company's margins, Exide said, adding that taking the Chapter 11 route would be the best option to restructure its finances and operations.
"In recent years, competition in the battery industry has intensified, especially in the auto parts retail and mass merchandise channels where large customers are able to use their buying power to negotiate lower prices and longer payment terms, or move business elsewhere if their demands are not met," Exide said.
In 2010, Wal-Mart Stores Inc , one of Exide's then major customers, chose Exide's principal rival Johnson Controls Inc as its sole supplier of transportation batteries and stopped carrying Exide's rival products.
Exide said Wal-Mart's switch resulted in a loss of about $160 million in annual revenue.
"More significantly, in addition to the revenue lost from Wal-Mart sales, Exide also lost an important and reliable source of battery cores under a captive-core arrangement with Wal-Mart," the company added.
Operations in Europe, which is experiencing a prolonged economic downturn, accounted for about 51.2 percent of the company's worldwide revenue.
Exide estimated its liabilities at $1.14 billion and assets at more than $1.89 billion, according to the court filing.
The company said the Chapter 11 filing applies to the U.S. parent only and its international operations are excluded.
It has also secured $500 million in debtor-in-possession (DIP) financing and expects to pay U.S. employees as usual and does not expect any material changes to their benefits.
The case is Exide Technologies, Case No. 13-11482, U.S. Bankruptcy Court, District of Delaware.
(Reporting by Sakthi Prasad in Bangalore; Editing by David Holmes)