NEW YORK Exide Technologies Inc., a major manufacturer and supplier of lead-acid batteries, is facing a class-action lawsuit in connection with alleged arsenic emissions at its Vernon, Calif., recycling facility.
The lawsuit, filed in U.S. District Court in California on behalf of those who purchased securities of Exide Technologies, alleges that the company failed to disclose that it had exposed nearly 110,000 residents near the facility to dangerously high levels of pollutants, including arsenic. The suit also alleges that the company knew that it would be unable to meet its debt repayment obligations and other pledges and promises under its debt agreements and indentures.
The South Coast Air Quality Management District, a government-run smog-control agency, in late March approved an assessment indicating that residents near the Vernon facility had faced an elevated risk of cancer due to arsenic emissions, according to court documents. Shortly thereafter, Los Angeles City Council members held a public hearing asking the government to file charges against the company to reduce the alleged health risks.
Exide announced in early April that it had retained Lazard Ltd., a New York-based financial advisory firm specializing in corporate restructuring. As news of the announcement broke, Exides stock plummeted nearly 47 percent to $1.37 per share before trading was halted.
While some industry sources believe that the Milton, Ga.-based company may be headed for bankruptcy, there are those who believe the company has alternative restructuring plans.
"I think its long overdue for Exide to change their advisors," said Craig Irwin, an analyst and senior vice president at Los Angeles-headquartered Wedbush Securities Inc., whose coverage includes Exide. "Also, I am not so sure that whats happening is an attempt to restructure debt."
Exide Technologies representatives could not be reached for comment.