Rayovac 2008 Annual Report Download - page 20

Table of Contents
Index to Financial Statements
assets may be limited by many factors beyond our control, such as general economic conditions, and we cannot predict whether we would be able to sell any
particular asset on favorable terms and conditions, if at all, or the length of time which we may be involved in any asset sale. For example, while we engaged in
discussions for sale of the Home and Garden Business in the fourth quarter of Fiscal 2007 and the first quarter of Fiscal 2008, we were unable to secure an
agreement on terms acceptable to the Company. In addition, although we entered into a definitive agreement to divest the assets related to Global Pet Supplies in
the third quarter of Fiscal 2008, we were unable to obtain the required consent of our lenders under our senior credit facilities necessary to consummate such sale.
We may not be able to generate sufficient cash flow to fund our cash requirements.
Our inability to generate sufficient cash flow to fund our cash requirements, including to make payments on our debt or to comply with any of the
covenants under our debt instruments, could result in a default under the indentures governing our Senior Subordinated Notes and/or our Senior Credit Facilities.
Such an event of default under our debt agreements would permit lenders or noteholders, as the case may be, to declare all amounts borrowed from them to be
due and payable, together with accrued and unpaid interest.
Additionally, if we fail to repay the debt under the Senior Credit Facilities when it becomes due, the lenders under the Senior Credit Facilities could
proceed against certain of our assets and capital stock which we have pledged to them as security. If the lenders under the Senior Credit Facilities caused all
amounts borrowed under these instruments to be due and payable immediately, all amounts outstanding under our Senior Subordinated Notes would also be
subject to acceleration by action of either the trustee under the respective indentures governing those notes or the respective holders of at least 25% in principal
amount of the respective notes outstanding. In the event of a default and acceleration, our assets and cash flow may not be sufficient to repay borrowings under
our outstanding debt instruments.
If our future cash flows and capital resources are insufficient, we could face substantial liquidity problems and will likely be required to significantly
reduce or delay capital expenditures, curtail, eliminate or dispose of substantial assets or operations, or undertake significant restructuring measures; which could
include reducing the size of our workforce, seeking additional capital or pursuing other alternatives to restructure or refinance our indebtedness, all of which
could substantially affect our business, financial condition and results of operations.
The terms of our indebtedness impose restrictions on us that may affect our ability to successfully operate our business.
Our Senior Credit Facilities, as defined in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Financing
Activities,” and the indentures governing our outstanding Senior Subordinated Notes each contain covenants that, among other things, limit our ability to:
• incur additional indebtedness;
• borrow money or sell preferred stock;
• create liens;
• pay dividends on or redeem or repurchase stock;
• make certain types of investments;
• issue or sell stock in our subsidiaries;
• restrict dividends or other payments from our subsidiaries;
• issue guarantees of debt;
• transfer or sell assets and utilize proceeds of any such sales;
• enter into agreements that restrict our restricted subsidiaries from paying dividends, making loans or otherwise transferring assets to us or to any of
our other restricted subsidiaries;
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008