Moody's cuts Spectrum Brands view to negative

Moody's Investors Service said it affirmed the debt ratings of Spectrum Brands Inc. (formerly Rayovac Corp.) but revised its outlook to negative from stable.

Ratings affirmed include the company's corporate family rating at B1, senior secured revolving credit facility due 2011 at B1, senior secured U.S. term loan due 2012 at B1, senior secured European term loan due 2012 at B1, senior secured European term loan B due 2012 at B1, senior secured Canadian term loan due 2012 at B1, $700 million 7 3/8% senior subordinated notes due 2015 at B3 and $350 million 8.5% senior subordinated notes due 2013 at B3.

Moody's said the outlook revision follows Spectrum's successive lowering of earnings forecasts in August and September, which has been driven by demand and cost pressures in several of its key product segments. Continuation of these trends through the winter holiday season and deeper into fiscal 2006 could further weaken Spectrum's credit metrics beyond levels appropriate for the category and could challenge its compliance with bank agreement financial covenants.

The affirmation of the ratings reflects Spectrum's adequate near-term cash flow and liquidity profile, its credible sales and profit enhancement opportunities into fiscal 2006 and its stable, leading market positions which aggregate to a near $3 billion well-diversified consumer product company, the agency added.

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