Could bankruptcy soon be in Spectrum Brands Inc.'s future? One analyst, Lauren DeSanto of Morningstar Inc., thinks that the consumer products company -- which carries batteries, lawn
and garden care products, specialty pet supplies, and Remington shaving and grooming
products -- could soon get a haircut: trading at $0.
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Spectrum Brands is not far off right now. The company is trading at 64 cents; last year shares were trading at $4.00.
On Nov. 4, 2008,
Spectrum Brands received written notice from the New York Stock
Exchange noting that the company was "below criteria" with a total
market capitalization of less than $75 million. It's market cap is
currently $33.78 million.
Spectrum Brands announced that its fourth-quarter net loss was $492.6 million due to a $460 million impairment charge on the value of its brands. To try to recover, the company said it would exit
the fertilizer business. Spectrum Brands has been trying to unload
businesses to recover from its debt, but sales have been unsuccessful. Executives decided at the last minute to pull the plug on its pet business to Salton Inc. even though the breakup fee was $3 million. So far losses this year have totaled $932 million.
Even though Spectrum Brands may
be run into the ground, CEO Kent Hussey could get $2 million extra if
he stays on through Dec. 31, 2009. The board of directors approved a
long-term incentive program giving bonuses of $1.6 million to four top
officials -- including $721,875 and a $1.24 million retention agreement
for Hussey, according to the
Wisconsin State Journal. Harbinger Capital Partners 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.
- Maria Woehr
