Fitch puts Spectrum on negative outlook |
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Fri, 16 Mar 2007 20:04
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NEW YORK (AP) - Credit agency Fitch Ratings affirmed its ratings Friday of Spectrum Brands Inc.'s debt, but Fitch's outlook for the company has been downgraded to negative from stable.Even as the company refinances its debt at higher interest rates, Fitch said it expects to keep its current debt ratings on Spectrum, which makes a range of consumer products including Rayovac batteries, Remington shavers and Cutter insect repellent.On March 12, Spectrum said it would refinance $350 million of its debt at a variable interest rate of 11 percent, up from a fixed rate of 8.5 percent. The rate will set to increase to 11.25 percent April 1 and semiannually after that, the company said.However, the higher rate is offset by fewer covenants and restrictions on the debt, giving the company more operating flexibility, analysts said.Fitch said the outlook change is due to a weakening in the company's financial performance since 2004. Spectrum has not experienced internal growth since that year, relying on acquisitions for revenue growth in 2005 and 2006, the agency said.The company's battery operations, which accounted for 34 percent of revenue in fiscal 2006, have experienced zero or negative growth since mid-2005, Fitch said.Spectrum has $2.4 billion debt, equivalent to 8.3 times earnings before interest, taxes, depreciation and amortization in calendar 2006 -- a high level, Fitch said.Fitch affirmed ratings of 'CCC' on issuer default risk, 'B/RR1' on its senior secured bank facility, and 'CCC-RR5' on Spectrum's senior subordinated debentures.Shares of Spectrum dropped 24 cents, or 3.4 percent, to $6.51 in afternoon trading on the New York Stock Exchange.Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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ACE ratings upgraded by Fitch 