S&P rates Spectrum revolver BB-, notes B

S&P said it assigned its BB- issue-level rating to Spectrum Brands Inc.’s proposed $600 million revolver due 2025. The recovery rating is 1, reflecting the expectation for very high (90%-100%; rounded estimate 95%) recovery in the event of a payment default.

The new revolver will replace the $890 million facility due 2022.

At the same time, S&P assigned a B issue-level rating to the company’s proposed $300 million senior of unsecured notes due 2030. The recovery rating is 4, reflecting the expectation for average (30%-50%; rounded estimate 45%) recovery in the event of a payment default. The transaction is leverage neutral, S&P said.

“We expect the company will use the net proceeds from the notes issuance to reduce revolver borrowings; on a pro forma basis including the proposed notes issuance, we anticipate the new downsized $600 million revolver will be mostly utilized (including borrowings and letter-of-credit utilization), though cash will remain close to $450 million. Debt outstanding pro forma for the proposed transaction is about $2.9 billion,” S&P said in a press release.

All of S&P’s ratings on the company, including the B issuer credit rating, are unchanged, the agency said.

The outlook is negative.

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