S&P shifts Spectrum Brands view to negative

S&P said it revised the outlook for Spectrum Brands Holdings Inc. to negative from stable and affirmed all its ratings for the company.

“The outlook revision reflects the potential for a lower rating if adjusted leverage does not approach 5x at the end of fiscal 2020 and below 5x in the subsequent year. The company recently announced its plan to repurchase $250 million of its shares through a $125 million accelerated share-repurchase program and additional $125 million through open-market repurchases. We expect this will result in discretionary cash flow after dividends and share repurchase to be negative for fiscal 2020,” said S&P in a press release.

S&P said it expects high restructuring charges related to the company's multiyear global productivity improvement plan to pressure EBITDA in fiscal 2020. “With the higher-than-expected restructuring charges and the announced share repurchase, we expect leverage in the low-5x area by the end of fiscal 2020.”

Offsetting these issues is that Spectrum has 5.3 million shares of Energizer Holdings Inc. common shares that it can sell starting Jan. 28. The shares are valued at around $240 million.

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