spectrum8k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of report (Date of earliest event reported):
May
21, 2008 (May 20, 2008)
SPECTRUM
BRANDS, INC.
(Exact
name of registrant as specified in its charter)
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Wisconsin
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001-13615
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22-2423556
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(State
or Other Jurisdiction of Incorporation)
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(Commission
File Number)
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(IRS
Employer Identification Number)
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Six
Concourse Parkway, Suite 3300
Atlanta,
Georgia
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30328
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(770)
829-6200
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(Registrant’s
telephone number, including area code)
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N/A
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(Former
name or former address, if changed since last
report)
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Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01. Entry into a Material Definitive Agreement.
On
May 20, 2008, Spectrum Brands, Inc., a Delaware corporation (the "Company"),
entered into a definitive Purchase Agreement (the "Purchase Agreement") with
Salton Inc., a Delaware corporation ("Salton"), and its wholly owned subsidiary,
Applica Pet Products LLC (together with Salton, the "Purchaser"), for the sale
of the Company's Global Pet Business (the "Transaction").
Subject
to the conditions contained in the Purchase Agreement, the Purchaser will pay
the Company $692.5 million in cash and will surrender (i) a principal amount of
the Company’s Variable Rate Toggle Senior Subordinated Notes due 2013 equal to
$98 million less an amount equal to accrued and unpaid interest on such notes
since the dates of the last interest payment for such notes and (ii) a principal
amount of the Company’s 7 3/8 percent Senior Subordinated Notes due 2015 equal
to $124.5 million less an amount equal to accrued and unpaid interest on such
notes since the dates of the last interest payments for such
notes. The Company is required to deliver audited segment level
results for the Global Pet Business to the Purchaser prior to the close of the
sale. Under the terms of the Purchase Agreement, if the adjusted
EBITDA derived from the 2007 audited financial statements of the Global Pet
Business is more than $3 million less than $92.9 million, then the purchase
price will be reduced by a multiple of 10 times the incremental
difference. In addition, the purchase price is subject to adjustment
for changes in working capital prior to closing and certain expenses incurred in
connection with the sale. In the event of any purchase price increase
as a result of such adjustments, the proportion of the purchase price that is
paid in cash may be increased. Funding for the transaction will be
provided by an equity investment to Salton provided by Harbinger Capital
Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations
Fund, L.P., the controlling stockholders of Salton (each a "Controlling
Fund").
The
closing of the Transaction is subject to certain customary conditions,
including, among other things, the expiration or termination of the applicable
waiting period under the Hart-Scott-Rodino Anti-Trust Improvement Act of 1976,
receipt of the consent of the Company's lenders under its senior credit
facilities, release of all guarantees associated with such senior credit
facilities and all liens affecting the assets of the Global Pet Business,
delivery to the Purchaser of audited financial statements for the Global Pet
Business for fiscal 2006 and 2007, and the absence of any Material Adverse
Effect (as defined in the Purchase Agreement) with respect to the Global Pet
Business between September 30, 2007 and the date the Transaction
closes. The Transaction is not subject to a financing
condition.
The
Company has made customary representations and warranties in the Purchase
Agreement, including, among other things, representations and warranties as to
organization, capitalization, authorization, required consents, litigation, financial
statements, absence of certain changes or events, tax, material contracts,
permits, insurance, intellectual property, environmental matters, compliance
with laws, employee benefit plans, labor matters, transaction with affiliates,
sufficiency of assets, customers,
suppliers, product
compliance with governmental regulations and other laws, warranties and bank
accounts.
The
Purchase Agreement contains customary covenants. The Company has
agreed to certain pre-closing covenants in the Purchase Agreement, including,
among other things, covenants that the Company, the transferring subsidiaries
and the subsidiaries being sold will, in all material respects
carry on the Global Pet Business in the ordinary course, in substantially the
same manner as previously conducted, during the period between the date of the
Purchase Agreement and closing of the Transaction and will not engage in certain
types of transactions without the consent of the Purchaser during such
period.
The
Purchaser has also made customary representations, warranties and covenants in
the Purchase Agreement.
In
addition, the Purchase Agreement contains certain termination rights for both
the Company and the Purchaser. Under certain circumstances, if the
Purchase Agreement is terminated the Purchaser may be required to pay the
Company a termination fee of $50 million. Each Controlling Fund has
executed a limited guarantee in favor of the Company pursuant to which such
Controlling Fund has guaranteed payment of a pro rata portion of such
termination fee.
The
foregoing summary of the Purchase Agreement and the transactions contemplated
thereby do not purport to be complete and are subject to, and qualified in their
entirety by, the full text of the Purchase Agreement attached as Exhibit 2.1 to
this Current Report on Form 8-K which is incorporated herein by
reference.
On
May 21, 2008, the Company issued a press release announcing the execution of the
Purchase Agreement. A copy of the press release is attached hereto as
Exhibit 99.1.
The
Purchase Agreement has been included to provide investors and stockholders with
information regarding its terms. Except for its status as a
contractual document that establishes and governs the legal relations among the
parties thereto with respect to the transaction described in this Current Report
on Form 8-K, the Purchase Agreement is not intended to be a source of factual,
business or operational information about the parties. The contractual
representations and warranties made by the parties in the Purchase Agreement may
be subject to a standard of materiality different from what stockholders of the
Company may view as material to their interests. The representations and
warranties contained in the Purchase Agreement have been negotiated with the
principal purpose of establishing the circumstances in which the Purchaser may
have the right not to consummate the Transaction, or a party may have the right
to terminate the Purchase Agreement, if the representations and warranties of
the other party prove to be untrue due to a change in circumstance or otherwise,
and allocates risk between the parties, rather than establishing matters as
facts. Investors in the Company's securities are not third-party
beneficiaries under the Purchase Agreement and should not rely on the
representations
and covenants or any descriptions thereof as characterizations of the actual
state of facts or condition of the parties or any of their
affiliates.
Non-GAAP
Measurements
Within
this report, reference is made to adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA). Adjusted EBITDA is a metric
used by the Company’s management and frequently used by the financial community
which provides insight into an organization’s operating trends and facilitates
comparisons between peer companies, since interest, taxes, depreciation and
amortization can differ greatly between organizations as a result of differing
capital structures and tax strategies. Adjusted EBITDA can also be a
useful measure of a company’s ability to service debt and is one of the measures
used for determining the Company’s debt covenant compliance. Adjusted
EBITDA excludes certain items that are unusual in nature or not comparable from
period to period. While the Company’s management believes that
adjusted EBITDA is useful supplemental information, such adjusted results are
not intended to replace the Company’s GAAP financial results and should be read
in conjunction with those GAAP results.
Forward Looking
Information
Certain
statements in this report are forward-looking statements which includes all
statements other than those made solely with respect to historical
fact. Forward-looking statements speak only as of the date on which
they are made, and we undertake no obligation to update or revise any
forward-looking statements. These statements are subject to a number of risks
and uncertainties that could cause results to differ materially from those
anticipated as of the date of this release. Actual results may differ
materially as a result of (1) the occurrence of any event, change or other
circumstance that could give rise to the termination of the definitive
agreement; (2) the inability to complete the transaction due to the failure to
receive required regulatory or other approvals or to satisfy other conditions to
the sale; (3) the risk that the proposed transaction disrupts current plans and
operations; (4) difficulty or unanticipated expenses in connection with the
sale; (5) changes and developments in external competitive market factors, such
as introduction of new product features or technological developments,
development of new competitors or competitive brands or competitive promotional
activity or spending, (6) changes in consumer demand for the various types of
products the Company offers, (7) unfavorable developments in the global credit
markets, (8) the impact of overall economic conditions on consumer spending, (9)
fluctuations in commodities prices, the costs or availability of raw materials
or terms and conditions available from suppliers, (10) changes in the general
economic conditions in countries and regions where the Company does business,
such as stock market prices, interest rates, currency exchange rates, inflation
and consumer spending, (11) the Company’s ability to successfully implement
manufacturing, distribution and other cost efficiencies and to continue to
benefit from its cost-cutting initiatives, (12) unfavorable weather conditions
and various other risks and uncertainties, including those discussed herein and
those set forth in the Company’s securities filings, including the most recently
filed Annual Report on Form
10-K
or Quarterly Report on Form 10-Q. The Company also cautions the
reader that its estimates of trends, market share, retail consumption of its
products and reasons for changes in such consumption are based solely on limited
data available to the Company and management’s reasonable assumptions about
market conditions, and consequently may be inaccurate, or may not reflect
significant segments of the retail market.
Item
9.01 Financial
Statements and Exhibits
(d) Exhibits
The following exhibits are filed
herewith:
Exhibit
Number Description
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2.1
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Purchase
Agreement, dated as of May 20, 2008, by and among Spectrum Brands, Inc.,
Salton Inc. and Applica Pet Products
LLC.
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99.1
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Press
Release issued by Spectrum Brands, Inc. on May 21,
2008.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Date: May
21, 2008
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SPECTRUM
BRANDS, INC.
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By:
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/s/
Anthony L. Genito
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Name:
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Anthony
L. Genito
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Title:
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Executive
Vice President,
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Chief
Financial Officer and
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Chief
Accounting Officer
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EXHIBIT
INDEX
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Exhibit
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Description
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2.1
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Purchase
Agreement, dated as of May 20, 2008, by and among Spectrum Brands, Inc.,
Salton Inc. and Applica Pet Products LLC.
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99.1
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Press
Release issued by Spectrum Brands, Inc. on May 21,
2008.
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