Moody's: Spectrum Brands on review

Moody's Investors Service said it placed the Caa1 corporate family and probability-of-default ratings of Spectrum Brands under review after the company agreed to sell its global pet business to Applica Pet Products for more than $900 million.

The agency affirmed the issuer's $700 million 7 3/8% senior subordinated bonds due 2015 at Caa3 (LGD5, 83%), $350 million variable-rate toggle senior subordinated notes due 2013 at Caa3 (LGD5, 83%), $1.55 billion senior secured revolving credit facility due 2013 at B2 (LGD2, 29%) and $50 million synthetic letter of credit facility due 2013 at B2 (LGD2, 29%).

"The combination of high leverage, declining operating performance trends and limited financial flexibility are the principal constraints on Spectrum's rating," Kevin Cassidy, vice president at Moody's, said in a written statement.

Product diversification and the general stability of the global pet division, which has helped offset the decline in the home and garden and global batteries and personal care businesses, support ratings, the agency noted.

The sale could hurt the company's credit profile with the loss of its most stable business but is likely to boost its financial flexibility, Cassidy added.

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