Valence Technology emerges from Chapter 11, closes on $20 million loan with new owner

By Lisa Kerner

Charlotte, N.C., Nov. 14 - Valence Technology, Inc. announced that it has emerged from the Chapter 11 business reorganization process as a privately held company.

The company closed on a $20 million loan provided by its new owner, Berg & Berg Enterprises, LLC, and Valence's common stock was cancelled effective Nov. 13.

On Wednesday, the U.S. Bankruptcy Court for the Western District of Texas approved Valence's plan of reorganization.

Valence's disclosure statement was approved on Sept. 23. The company filed its plan on Aug. 21.

Plan terms

As previously reported, the plan terms include the following:

• An infusion of $20 million of new capital, which will be raised through an exit loan funded by pre-bankruptcy secured lender Berg & Berg Enterprises, LLC and which will fund the payments to creditors and the reorganized company's working capital needs;

• The maturity date of $19.1 million of the $69.1 million total pre-bankruptcy secured debt owed to Berg & Berg will be extended under a new note;

• The debt evidenced by the new loan and the new note will continue to have the first-lien security interests and first-lien priorities originally granted to Berg & Berg, but payment of the new loan and the new note will be subordinated to payment of the claims of a number of junior classes, including general unsecured creditors;

• The exchange of the remaining $50 million of Berg & Berg's secured claim for 100% of the new equity in reorganized Valence;

• Payment in full in cash over time of the cure payments owed to Tianjin Lishen Battery Joint-Stock Co., Ltd. under a Nov. 9, 2012 bankruptcy court order;

• Payment in full of unsecured claims of $500 or less;

• Payment to general unsecured creditors of a share of $1.1 million on the plan effective date and $1.1 million on the one-year anniversary of the effective date;

• Payment of $1.51 million on the effective date and $1.51 million on the one-year anniversary of the effective date in satisfaction of the unsecured claim of Carl Warden; and

• Cancellation of existing equity interests with no distribution to interest holders.

Austin, Texas-based Valence Technology is a developer of lithium-ion batteries. The company filed for bankruptcy on July 12, 2012 under Chapter 11 case number 12-11580.

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