Rayovac 2011 Annual Report Download - page 119

SPECTRUM BRANDS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(In thousands, except per share amounts)
In addition, the 2018 Indenture provides for customary events of default, including failure to make required
payments, failure to comply with certain agreements or covenants, failure to make payments on or acceleration of
certain other indebtedness, and certain events of bankruptcy and insolvency. Events of default under the 2018
Indenture arising from certain events of bankruptcy or insolvency will automatically cause the acceleration of the
amounts due under the 9.5% Notes. If any other event of default under the 2018 Indenture occurs and is continuing,
the trustee for the 2018 Indenture or the registered holders of at least 25% in the then aggregate outstanding
principal amount of the 9.5% Notes may declare the acceleration of the amounts due under those notes.
The 9.5% Notes were issued at a 1.37% discount and were recorded net of the $10,245 amount incurred.
The discount is reflected as an adjustment to the carrying value of principal, and is being amortized with a
corresponding charge to interest expense over the remaining life of the 9.5% Notes. During Fiscal 2010, the
Company recorded $20,823 of fees in connection with the issuance of the 9.5% Notes. The fees are classified as
Debt issuance costs within the accompanying Consolidated Statements of Financial Position and are amortized as
an adjustment to interest expense over the remaining life of the 9.5% Notes.
12% Notes
On August 28, 2009, in connection with emergence from the voluntary reorganization under Chapter 11 of the
Bankruptcy Code and pursuant to the Debtors’ confirmed plan of reorganization, the Company issued $218,076
in aggregate principal amount of 12% Notes maturing August 28, 2019. Semiannually, at its option, the
Company may elect to pay interest on the 12% Notes in cash or as payment in kind (“PIK”). PIK interest is
added to principal on the relevant semi-annual interest payment date. Under the Prior Term Facility, the
Company agreed to make interest payments on the 12% Notes through PIK for the first three semi-annual interest
payment periods following the Effective Date. As a result of the refinancing of the Prior Term Facility, the
Company is no longer required to make interest payments as payment in kind after the semi-annual interest
payment date of August 28, 2010. All Fiscal 2011 interest payments were made in cash.
The Company may redeem all or a part of the 12% Notes, upon not less than 30 or more than 60 days
notice, beginning August 28, 2012 at specified redemption prices. Further, the indenture governing the 12%
Notes (the “2019 Indenture”) requires the Company to make an offer, in cash, to repurchase all or a portion of the
applicable outstanding notes for a specified redemption price, including a redemption premium, upon the
occurrence of a change of control of the Company, as defined in such indenture.
At both September 30, 2011 and September 30, 2010, the Company had outstanding principal of $245,031,
respectively, under the 12% Notes, including PIK interest of $26,955 that was added to principal during Fiscal
2010.
The 2019 Indenture contains customary covenants that limit, among other things, the incurrence of
additional indebtedness, payment of dividends on or redemption or repurchase of equity interests, the making of
certain investments, expansion into unrelated businesses, creation of liens on assets, merger or consolidation with
another company, transfer or sale of all or substantially all assets, and transactions with affiliates.
In addition, the 2019 Indenture provides for customary events of default, including failure to make required
payments, failure to comply with certain agreements or covenants, failure to make payments on acceleration of
certain other indebtedness, and certain events of bankruptcy and insolvency. Events of default under the 2019
Indenture arising from certain events of bankruptcy or insolvency will automatically cause the acceleration of the
amounts due under the 12% Notes. If any other event of default under the 2019 Indenture occurs and is continuing,
the trustee for the indenture or the registered holders of at least 25% in the then aggregate outstanding principal
amount of the 12% Notes may declare the acceleration of the amounts due under those notes.
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