Daily News: January 26, 2012

Ener1 Files for Chapter 11; Reaches Deal for $81 Million DIP Loan


Ener1, Inc. announced that it has reached agreement with its primary investors and lenders on a restructuring plan that will significantly reduce its debt and provide up to $81 million to recapitalize the company to support its long-term business objectives and strategic plan.

To implement this restructuring plan, the company has voluntarily initiated a pre-packaged Chapter 11 case in U.S. Bankruptcy Court in the Southern District of New York, in which it is requesting that the court confirm a 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 the company’s foreign or domestic subsidiaries has initiated reorganization cases, and they are not expected to be adversely impacted by the legal proceedings. The restructuring plan provides for the continued normal operation of the company’s 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. The company’s 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, which has been unanimously accepted by all of Ener1’s impaired creditors, provides for a restructuring of the company’s 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 by the company’s lender Bzinfin S.A. 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 the company’s 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.

The company’s legal advisor is Reed Smith LLP and its financial advisor is Houlihan Lokey Capital.

Ener1, Inc. is an energy storage technology company that develops compact, lithium-ion-powered energy storage solutions for applications in the electric utility, transportation and industrial electronics markets.