Spectrum receives waiver of default, consents to amend 8½% notes

By Angela McDaniels

Seattle, March 30 - Spectrum Brands Inc. had received consents, waivers and tenders from holders of $344.831 million, or 98.52%, of its $350 million 8½% senior subordinated notes due Oct. 1, 2013 as of March 29, according to a company news release.

On March 19, the company began an exchange offer to refinance the notes with new senior subordinated notes due Oct. 1, 2013, a solicitation of waivers of any default under the indenture governing the 8½% notes and a solicitation of consents to amend the indenture to eliminate substantially all of the restrictive covenants and some default provisions.

The consent solicitation ended at 5 p.m. ET on March 29.

Noteholders who tendered by the consent solicitation deadline will "promptly" receive $950 principal amount of new variable-rate toggle senior subordinated notes due 2013 per $1,000 principal amount of notes tendered, a consent fee equal to $50 of new notes per $1,000 principal amount of notes tendered and accrued interest up to but excluding April 1, according to the release.

The remaining outstanding notes may be tendered until midnight ET on April 13. Noteholders will receive $950 principal amount of new variable-rate toggle senior subordinated notes due 2013 per $1,000 principal amount of notes tendered plus and accrued interest up to but excluding the settlement date.

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 notes will be callable at scheduled redemption prices, reflecting a premium to par that will decline to par on Oct. 1, 2010.

The closing of the exchange offer is subject to the refinancing of the company's existing bank credit facility.

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

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 had 60 days from the notice to cure the default.

The company previously said it 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 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 and grooming and personal care products, and household insecticides.

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