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Senior lenders killed Spectrum Brands Inc.'s deal to unload its pet products business to Salton Inc. on Monday, sending the seller's shares 6% lower by midday.
Announced in May, the cash sale of Applica Pet Products LLC for $692.5 million would have allowed the owner of brands such as Dingo, Tetra and Nature's Miracle to pay down its substantial debt load. Spectrum said the proceeds would be used to cut annual interest costs by $70 million. However the banks and other holders of the company's senior debt likely didn't see Spectrum's other business generating enough cash without the pets business to service the remaining debt or were looking for better terms to retire their claims. For the time being, Spectrum says it will continue to operate the pet supply business and look for other alternatives for reducing its indebtedness. Spectrum will also pay a $3 million breakup fee to Salton, a portfolio company of private equity firm Harbinger Capital Partners. For its part Harbinger also holds a 9.8% stake in Spectrum, alongside Thomas H. Lee Partners LP, which has a 23% stake as a result of its sale of Rayovac Corp. to Spectrum for $1.2 billion in 2005. - George White See press release See TheDeal.com story on the sale CategoriesPrivate capital video
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