Moody's downgrades Spectrum

Moody's Investors Service said it lowered Spectrum Brands Inc.'s corporate family rating to B2 from B1, $700 million 7 3/8% senior subordinated notes due 2015 to Caa1 from B3, $350 million 8½% senior subordinated notes due 2013 to Caa1 from B3. The $300 million senior secured revolving credit facilities and $1.2 billion senior secured term loan facilities were confirmed at B1.

The outlook is stable.

The downgrade reflects the deterioration in Spectrum's credit protection measures and Moody's expectation that earnings and liquidity will remain under pressure over the near-to-medium term as the company attempts to address demand and cost challenges across its various business lines.

However, Moody's also confirmed its rating on Spectrum's senior secured credit facilities, recognizing their superior position in the capital structure and the expectation that internal cash flows and asset sale proceeds will be used for senior secured debt repayment during fiscal 2006.

The rating action concludes the review for possible downgrade, which began in November in light of disappointing operating results and downwardly revised earnings forecasts from the company.

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