16110 Thu, 02/05/2009 - 1:04pm
SAN ANTONIO, Texas–Spectrum Brands, the parent company of the Remington shaver brand, has made a pre-packaged Chapter 11 filing at the U.S. bankruptcy court here.
The company included a pre-negotiated plan of reorganization in its filing, which proposes a refinancing of Spectrum’s unsecured public notes. A statement from Spectrum said the plan would involve a debt-for-equity swap in which the holders of notes valued at about 70 percent of the company’s outstanding bonds would cancel those bonds. The noteholders would then receive new common stock, created under this proposed plan, and new bonds equal to 20 percent of the unpaid principal and interest on the existing bonds. The current common stock will then be eliminated without payments to the shareholders.
If the court approves the plan, the debt on its balance sheet would be reduced by about $840 million, or about one-third of its balance-sheet debt, according to the statement. It would also eliminate $95 million in annual cash interest payments for at least each of the next two years. The statement valued Spectrum’s current debt at about $2.6 billion.
The company also said it failed to make a $25.8 million interest payment to the noteholders on Feb. 2, which triggered a default on the notes.
Kent Hussey, Spectrum’s chief executive officer, said the company’s debt levels have slowed its “attractive growth prospects.” Specifically, Hussey cited the Global Batteries and Personal Care segment, which includes the Remington line which posted its eighth consecutive quarter of growth in operating income in the first quarter of the current fiscal year (Spectrum’s fiscal year runs from Oct. 1 to Sept. 30). He added that the plan of reorganization, if approved by the bankruptcy court, would generate more than $100 million in annual free cash flow.