NEW YORK — Spectrum Brands Inc., the maker of Rayovac batteries and Remington shavers, filed for Chapter 11 bankruptcy protection Tuesday under a heavy debt load.
The Atlanta-based company filed for court protection after it missed a $25.8 million interest payment on Monday. The company is the latest in a long list of bankruptcies filed amid the global recession.
Spectrum reported $4.44 billion in debt and $10.07 billion in assets in its filing. The debt figure includes pension obligations, a company spokesman said. Spectrum said in its news release that it has $2.6 billion in outstanding loans.
The company filed a pre-negotiated bankruptcy plan, under which current shareholders will get wiped out. If the plan is approved, Spectrum would issue new shares and other creditors would maintain their standing.
The filing, made in U.S. Bankruptcy Court for the Western District of Texas in San Antonio, does not affect its operations outside the U.S. Spectrum also owns the Repel and Cutter insect repellent brands, as well as pet supply and home and garden businesses. It sells to major retailers nationwide.
Spectrum said it had negotiated with its bondholders to reduce the amount of debt on its balance sheet by about a third, or about $840 million. It said owners of about 70 percent of its bonds support the current plan. It also said it had eliminated $95 million in interest payments for the next two years and freed up additional cash.
"Our businesses have attractive growth prospects that have been encumbered by the level of debt the parent company is carrying," Spectrum Chief Executive Kent Hussey said in a statement. "After careful consideration, we decided that the approach announced today would be the most effective and expedient path for us."
Hussey estimated that once the refinancing was complete, the company would generate a cash flow of more than $100 million a year. He said there were no plans to make "any significant operating changes."
"We do plan to continue the initiatives already under way to make our operations even more efficient going forward," he added.
Spectrum's most recent quarterly results from November show that it lost $492.6 million for the quarter ended Sept. 30. It also announced then that it would sell its fertilizer business to save money.
Lawyers had asked for the usual first-day motions in the bankruptcy. The court's approval of them will allow the company to continue to operate as is.
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