Spectrum Brands plans exchange offer, consent and waiver solicitation for 8½% notes

By Angela McDaniels

Seattle, March 9 - Spectrum Brands, Inc. is intending to launch an offer to exchange up to $350 million of new variable-rate toggle interest pay-in-kind senior subordinated notes due 2013 for the company's 8½% senior subordinated notes due 2013, according to a T-3 filing with the Securities and Exchange Commission.

Noteholders who exchange will receive $1,000 principal amount of new notes for each $1,000 principal amount of old notes exchanged and accrued interest up to the date of exchange.

Interest on the new notes will start at 11% through April 1, 2007 and step up in 25 or 50 basis point increments to 15.25% for the final period ending Oct. 1, 2013. If the coupon is paid in kind, the rate will be 100 bps higher.

The company is also soliciting a waiver of any default under the indenture governing the 8½% notes and consents to amend the indenture to eliminate substantially all of the restrictive covenants and some default provisions.

Spectrum received a notice of default on the 8½% notes on Jan. 16 because of the company's incurrence of debt under its fourth amended credit agreement.

The company believes that it is not in default under the terms of the notes indenture, as it believes that all existing debt was incurred in compliance with the indenture.

Spectrum has 60 days from the notice to cure the default.

An event of default could also result in the acceleration of the company's 7 3/8% senior subordinated notes due 2015 and the credit agreement.

As of Sept. 30, there were $350 million of the 8½% notes outstanding, $700 million of the 7 3/8% notes outstanding and $26 million outstanding under the revolving credit facility portion of the credit agreement, as well as $1.144 billion in other debt outstanding under the credit agreement.

U.S. Bank NA is the exchange agent, and Global Bondholder Services Corp. is the information agent

Spectrum Brands is an Atlanta-based consumer products company and a supplier of batteries and portable lighting; lawn and garden care products; specialty pet supplies; shaving, grooming and personal care products; and household insecticides.

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