Rayovac 2010 Annual Report Download - page 54

our common stock was reached in view of the fact that we had recently fallen below the NYSE’s continued
listing standard regarding average global market capitalization over a consecutive 30 trading day period of not
less than $25 million, the minimum threshold for listing on the NYSE. Our common stock was delisted from the
NYSE effective January 23, 2009.
As a result of our Bankruptcy Filing, we were able to significantly reduce our indebtedness. As a result of
the Merger, we were able to further reduce our outstanding debt leverage ratio. However, we continue to have a
significant amount of indebtedness relative to our competitors and paying down outstanding indebtedness
continues to be a priority for us. The Bankruptcy Filing is discussed in more detail under “Chapter 11
Proceedings.”
Chapter 11 Proceedings
As a result of its substantial leverage, the Company determined that, absent a financial restructuring, it
would be unable to achieve future profitability or positive cash flows on a consolidated basis solely from cash
generated from operating activities or to satisfy certain of its payment obligations as the same may become due
and be at risk of not satisfying the leverage ratios to which it was subject under its then existing senior secured
term loan facility, which ratios became more restrictive in future periods. Accordingly, on February 3, 2009, we
announced that we had reached agreements with certain noteholders, representing, in the aggregate,
approximately 70% of the face value of our then outstanding senior subordinated notes, to pursue a refinancing
that, if implemented as proposed, would significantly reduce our outstanding debt. On the same day, the Debtors
filed voluntary petitions under Chapter 11 of the Bankruptcy Code, in the Bankruptcy Court (the “Bankruptcy
Filing”) and filed with the Bankruptcy Court a proposed plan of reorganization (the “Proposed Plan”) that
detailed the Debtors’ proposed terms for the refinancing. The Chapter 11 cases were jointly administered by the
Bankruptcy Court as Case No. 09-50455 (the “Bankruptcy Cases”). The Bankruptcy Court entered a written
order (the “Confirmation Order”) on July 15, 2009 confirming the Proposed Plan (as so confirmed, the “Plan”).
On the Effective Date the Plan became effective, and the Debtors emerged from Chapter 11 of the
Bankruptcy Code. Pursuant to and by operation of the Plan, on the Effective Date, all of Old Spectrum’s existing
equity securities, including the existing common stock and stock options, were extinguished and deemed
cancelled. Reorganized Spectrum Brands, Inc. filed a certificate of incorporation authorizing new shares of
common stock. Pursuant to and in accordance with the Plan, on the Effective Date, reorganized Spectrum
Brands, Inc. issued a total of 27,030,000 shares of common stock and approximately $218 million in aggregate
principal amount of 12% Senior Subordinated Toggle Notes due 2019 (the “12% Notes”) to holders of allowed
claims with respect to Old Spectrum’s 8
1
⁄ 2 % Senior Subordinated Notes due 2013 (the “8
1
⁄ 2 Notes”), 7
3
⁄ 8 %
Senior Subordinated Notes due 2015 (the “7
3
⁄ 8 Notes”) and Variable Rate Toggle Senior Subordinated Notes due
2013 (the “Variable Rate Notes”) (collectively, the “Senior Subordinated Notes”). For a further discussion of the
12% Notes see “Debt Financing Activities—12% Notes.” Also on the Effective Date, reorganized Spectrum
Brands, Inc. issued a total of 2,970,000 shares of common stock to supplemental and sub-supplemental
debtor-in-possession credit facility participants in respect of the equity fee earned under the Debtors’
debtor-in-possession credit facility.
Accounting for Reorganization
Subsequent to the Petition Date, our financial statements are prepared in accordance with ASC Topic 852:
“Reorganizations,” (“ASC 852”). ASC 852 does not change the application of GAAP in the preparation of our
financial statements. However, ASC 852 does require that financial statements, for periods including and
subsequent to the filing of a Chapter 11 petition, distinguish transactions and events that are directly associated
with the reorganization from the ongoing operations of the business. In accordance with ASC 852 we have done
the following:
• On our Consolidated Statements of Financial Position included in this Annual Report on Form 10-K,
we have separated liabilities that are subject to compromise from liabilities that are not subject to
compromise;
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