Last week company representatives began assuring customers, including DaimlerChrysler and Kmart Corp., that battery shipments would not be interrupted in the event of legal action.
DaimlerChrysler has found another supplier for a "small number" of batteries that had been supplied by Exide, a spokesman said. The decision was not related to Exide's troubles, the spokesman said.
"Exide is under a lot of stress," said Martin King, a director at credit rating firm Standard & Poor's. "We've come pretty much down to the wire. A (bank) waiver might be an option, but it would be a temporary situation."
Robert Lutz, the General Motors vice chairman for product development who also is Exide's chairman, could not be reached for comment Friday, April 12. Lutz ran the supplier from 1998 until August 2001, when he agreed to join GM.
A spokesman for Exide CEO Craig Muhlhauser said only that the company is examining a range of options.
To be successful in the battery business, a company must have good product, low manufacturing costs, a solid customer base and little debt. Exide falls short on most of those points, an industry observer says.
Exide became the world's biggest automobile battery maker through a series of acquisitions that created $1.4 billion in long-term debt. Substantial losses, legal troubles, cash flow constraints and weakness in the original-equipment and retail markets have hobbled the Princeton, N.J., company.
Exide generated $1.8 billion in sales for the nine months of fiscal 2002 that ended December 2001.
Exide has not complied with the terms of its bank loans since at least January, when senior lenders granted the company a second waiver of business requirements known as covenants, which ran through April 12. Exide's banks must decide whether to issue another waiver or force the company to file for Chapter 11.