Spectrum Brands files for Ch. 11, proposes reorganization plan
ATLANTA Spectrum Brands, a consumer products company whose portfolio includes Remington shaving and grooming products, has filed for Chapter 11 to restructure its debt. The company’s non-U.S. operations are not included in the Chapter 11 proceedings.
The company stated that it has reached agreements with note holders representing, in the aggregate, roughly 70% of the face value of its outstanding bonds to purse a restructuring. A refinancing on the agreed terms would enable the company to reduce debt by about $840 million (or about one-third), eliminate about $95 million in annual cash interest payments for at least each of the next two years, and free up additional cash that can be reinvested in its business to support revenue and profit growth. The company has outstanding debt totaling about $2.6 billion.
Spectrum Brands included in the filing a pre-negotiated plan of reorganization, which does not propose to impact any existing creditors other than the note holders and equity holders. In other words, if the plan is approved as proposed, the company would continue to provide pay and benefits to its employees as usual, honor all obligations to its customers, and pay suppliers in full for their claims upon consummation of the plan.
The company stressed that all of its operating units in the United States and around the world expect to continue to meet their respective obligations, subject to applicable limitations, to their suppliers, customers and employees in the ordinary course of business during the restructuring process. The company expects to exit the restructuring process in about four to six months. When the refinancing is complete, Spectrum Brands expects to generate in excess of $100 million in annual free cash flow.
“We do not believe there is any current need — and we have no current plans — to make any significant operating changes to our three business units, which have been profitable and have generated positive cash flow, and are meaningful competitors in their respective industries,” stated Kent Hussey, CEO of Spectrum Brands. “We do plan to continue the initiatives already underway to make our operations even more efficient going forward, and we remain focused on driving increased sales and profitability over the long term.”