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Spectrum intends to use $2.9 billion of proceeds to de-lever to 3.5x
By Devika Patel
Knoxville, Tenn., Nov. 19 – Spectrum Brands Holdings, Inc. management plans to use the $2.9 billion of proceeds from some planned divestitures to “meaningfully” de-lever the balance sheet, reducing leverage to around 3.5x.
Total leverage was approximately 5.8x as of Sept. 30 and net leverage was 5.2x.
“Upon completion of our planned divestitures, we expect to apply the $2.9 billion plus gross proceeds towards significant debt reduction, which will meaningfully de-lever our balance sheet,” executive chairman and chief executive officer David M. Maura said on the company’s fourth quarter and year ended Sept. 30 earnings conference call on Monday.
“Once we close these transactions, we will de-lever the balance sheet to approximately 3.5x,” Maura said.
The company’s management will not commit to declaring what debt, specifically, it intends to pay off, but the company’s top financial executive said that he would like to address Spectrum’s term loan and some 7¾% notes.
“We have a large amount, $890 million I believe, of HRG 7¾% notes,” executive vice president and chief financial officer Douglas L. Martin said on the call.
“I don’t like that piece of paper.
“Also, for financial flexibility going forward, I would like to look at the term loan and see if we can get rid of senior secured bank debt,” Martin said.
Adjusted EBITDA was $134.1 million in the fourth quarter of fiscal 2018, compared to $174.5 million in the fourth quarter of fiscal 2017.
The company had a cash balance of $552.5 million and more than $777 million available under its $800 million cash flow revolver as of Sept. 30.
As of Sept. 30, the company had approximately $4,812,000,000 of debt outstanding.
Spectrum is a Middleton, Wis.-based consumer products company.
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