Spectrum Brands Announces the Sale of its Global Pet Supply Business; Proceeds to be Used for Debt Reduction

  
    
  
  
    
      Spectrum Brands (the “Company”) 
      (NYSE: SPC) today announced that it has signed a definitive agreement 
      with Salton Inc. (“Salton”) 
      and its wholly owned subsidiary, Applica Pet Products LLC, for the sale 
      of its Global Pet Business for $692.5 million in cash and an aggregate 
      principal amount of the Company’s 
      subordinated debt securities equal to $222.5 million less an amount 
      equal to accrued and unpaid interest on such subordinated debt 
      securities since the dates of the last interest payments thereon, which, 
      depending on when the closing occurs, could be an amount of up to 
      approximately $6.5 million.
    
    
      Under and subject to the terms of the agreement, Salton will pay the 
      Company $692.5 million of the purchase price in cash and will surrender 
      a principal amount of the Company’s Variable 
      Rate Toggle Senior Subordinated Notes due 2013, also referred to as PIK 
      Notes, equal to $98 million less an amount equal to accrued and unpaid 
      interest, and 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. Additionally, the 
      agreement between the parties provides that 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, the purchase 
      price will be reduced by a multiple of 10 times the incremental 
      difference. These audited segment level results are required to be 
      delivered to Salton prior to the close of the sale. The Company does not 
      currently believe, based on available information, that any purchase 
      price adjustment related to the audited adjusted EBITDA will be 
      required. 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.
    
    
      Consistent with its previously communicated strategies, the Company will 
      apply the net cash proceeds from the sale to pay down a portion of its 
      ABL facility and other senior bank facilities in accordance with the 
      Company’s debt agreements.
    
    
      “The sale of our Global Pet Supply business 
      for a full and fair value is a critical step toward achieving one of our 
      key priorities, improving the overall capital structure of this company,” 
      said Kent Hussey, Chief Executive Officer. “We 
      estimate that this transaction will decrease our total leverage ratio of 
      approximately 8.5 as of March 30, 2008 to approximately 7.8 on a pro 
      forma basis and will provide greater flexibility to our remaining core 
      businesses. Additonally, we estimate that this transaction will decrease 
      our senior leverage ratio from approximately 5.0 as of March 30, 2008 to 
      approximately 4.0 on a pro forma basis.” The 
      Company also estimates that its annualized cash interest expense will be 
      reduced by approximately $70 million as a result of this transaction.
    
    
      Subject to approval of its senior lenders and certain regulatory and 
      other statutory notices and filings, the Company currently expects the 
      transaction to close by the end of August 2008.
    
    
      Sutherland acted as legal advisor to the Company and Skadden, Arps, 
      Slate, Meagher Flom LLP also provided certain legal advice to the 
      Company in connection with the transaction. Goldman, Sachs & Co. is 
      acting as the Company’s financial advisor.
    
    
      Non-GAAP Measurements
    
    
      Within this press release, reference is made to adjusted earnings before 
      interest, taxes, depreciation and amortization (EBITDA). Adjusted EBITDA 
      is a metric used by 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. The Company provides this information 
      to investors to assist in comparisons of past, present and future 
      operating results and to assist in highlighting the results of on-going 
      operations. While the Company’s management 
      believes that adjusted EBITDA are 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.
    
    
      About Spectrum Brands, Inc.
    
    
      Spectrum Brands is a global consumer products company and a leading 
      supplier of consumer batteries, lawn and garden care products, specialty 
      pet supplies, shaving and grooming products, household insect control 
      products, personal care products and portable lighting. Helping to meet 
      the needs of consumers worldwide, included in its portfolio of widely 
      trusted brands are Rayovac®, Remington®, 
      Tetra®, Marineland®, 
      Nature’s Miracle®, 
      Dingo®, 8-In-1®, 
      Spectracide®, Schultz®, 
      Cutter®, Repel®, 
      and HotShot®. Spectrum Brands’ 
      products are sold by the world's top 25 retailers and are available in 
      more than one million stores in more than 120 countries around the 
      world. Headquartered in Atlanta, Georgia, Spectrum Brands generated 
      fiscal year 2007 net sales of $2.6 billion. The Company’s 
      stock trades on the New York Stock Exchange under the symbol SPC.
    
    
      About Salton, Inc.
    
    
      Based in Miramar, Florida, Salton, Inc. and its subsidiaries are leading 
      marketers and distributors of a broad range of branded small household 
      appliances. Salton markets and distributes small kitchen and home 
      appliances, pet and pest products, and personal care products. Salton 
      has a broad portfolio of well recognized brand names, including Black & 
      Decker®, George Foreman®, 
      Russell Hobbs®, Toastmaster®, 
      LitterMaid®, and Farberware®. 
      Salton's customers include mass merchandisers, specialty retailers and 
      appliance distributors primarily in North America, South America, Europe 
      and Australia.
    
    
      Certain matters discussed in this news release, with the exception of 
      historical matters, may be forward-looking statements within the meaning 
      of the Private Securities Litigation Reform Act of 1995. 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.
    
    
      The Company also cautions the reader that undue reliance should not be 
      placed on any forward-looking statements, which speak only as of the 
      date of this release. The Company undertakes no duty or responsibility 
      to update any of these forward-looking statements to reflect events or 
      circumstances after the date of this report or to reflect actual 
      outcomes.