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Spectrum Brands lenders object to disclosure statement
By Caroline Salls
Pittsburgh, April 1 - Spectrum Brands Inc.'s senior secured lenders objected to the company's proposed disclosure statement, arguing that the plan described in the statement is an attempt by three hedge funds to take over Spectrum, according to a Tuesday filing with the U.S. Bankruptcy Court for the Western District of Texas.
The lenders said the plan attempts to engineer the takeover by reinstating $1.4 billion of structurally senior debt owed to the senior secured lenders, "who are the creditor constituency with the largest economic stake in the debtors, and who have the most to lose if the plan were to be confirmed and thereafter fail."
According to the objection, the proposed plan does not leave the lenders' rights unimpaired, nor does it reinstate their loans without alteration, as is legally required for confirmation.
Instead, the lenders said the proposed plan creates new, incurable, non-monetary events of default under the senior secured lenders' credit agreement, preventing reinstatement as a matter of law.
In addition, the lenders said the company would be required to restate and alter many of the financial representations included in several historical compliance certificates "for the proposed plan to be remotely feasible" under bankruptcy law.
The lenders said the plan cannot be confirmed, and the court should not approve the disclosure statement.
Spectrum Brands is an Atlanta-based consumer products company and supplier of batteries, lawn and garden products, pet supplies, shaving and grooming products, household insect control products, personal care products and portable lighting.
The company filed for bankruptcy on Feb. 3. Its Chapter 11 case number is 09-50455.
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