Rayovac 2013 Annual Report Download - page 25

Restrictive covenants in the Senior Secured Facilities and the Indentures may restrict our ability to pursue
our business strategies.
The Senior Secured Facilities and the Indentures each restrict, among other things, asset dispositions,
mergers and acquisitions, dividends, stock repurchases and redemptions, other restricted payments, indebtedness
and preferred stock, loans and investments, liens and affiliate transactions. The Senior Secured Facilities and the
Indentures also contain customary events of default. These covenants, among other things, limit our ability to
fund future working capital and capital expenditures, engage in future acquisitions or development activities, or
otherwise realize the value of our assets and opportunities fully because of the need to dedicate a portion of cash
flow from operations to payments on debt. In addition, the Senior Secured Facilities contain financial covenants
relating to maximum leverage and minimum interest coverage. Such covenants could limit the flexibility of our
restricted entities in planning for, or reacting to, changes in the industries in which they operate. Our ability to
comply with these covenants is subject to certain events outside of our control. If we are unable to comply with
these covenants, the lenders under our Senior Secured Facilities could terminate their commitments and the
lenders under our Senior Secured Facilities or the holders of the Notes could accelerate repayment of our
outstanding borrowings and, in either case, we may be unable to obtain adequate refinancing of outstanding
borrowings on favorable terms or at all. If we are unable to repay outstanding borrowings when due, the lenders
under the Senior Secured Facilities will also have the right to proceed against the collateral granted to them to
secure the indebtedness owed to them. If our obligations under the Senior Secured Facilities are accelerated, we
cannot assure you that our assets would be sufficient to repay in full such indebtedness.
The sale or other disposition by Harbinger Group Inc., the holder of a majority of the outstanding shares of
our common stock, to non-affiliates of a sufficient amount of the common stock of SB Holdings would
constitute a change of control under the agreements governing Spectrum Brands’ debt.
Harbinger Group Inc. (“HRG”) owns a majority of the outstanding shares of the common stock of SB
Holdings. The sale or other disposition by HRG to non-affiliates of a sufficient amount of the common stock of
SB Holdings could constitute a change of control under certain of the agreements governing Spectrum Brands’
debt, including any foreclosure on or sale of SB Holdings’ common stock pledged as collateral by HRG pursuant
to the indenture governing HRG’s 7.875% Senior Secured Notes due 2019. Under the Term Loan and the ABL
Revolving Credit Facility, a change of control is an event of default and, if a change of control were to occur,
Spectrum Brands would be required to get an amendment to these agreements to avoid a default. If Spectrum
Brands was unable to get such an amendment, the lenders could accelerate the maturity of each of the Spectrum
Brands Term Loan and the ABL Revolving Credit Facility. In addition, under the indentures governing the
Notes, upon a change of control of SB Holdings, Spectrum Brands is required to offer to repurchase such notes
from the holders at a price equal to 101% of the principal amount of the notes plus accrued interest or obtain a
waiver of default from the holders of such notes. If Spectrum Brands was unable to make the change of control
offer, or to obtain a waiver of default, it would be an event of default under the indentures that could allow
holders of such notes to accelerate the maturity of the notes. See “Risks Related to SB Holdings’ Common
Stock-The Harbinger Parties and HRG exercise significant influence over us and their interests in our
business may be different from the interests of our stockholders” in this Form 10-K.
We face risks related to the current economic environment.
The current economic environment and related turmoil in the global financial system has had and may
continue to have an impact on our business and financial condition.
Global economic conditions have significantly impacted economic markets within certain sectors, with
financial services and retail businesses being particularly impacted. Our ability to generate revenue depends
significantly on discretionary consumer spending. It is difficult to predict new general economic conditions that
could impact consumer and customer demand for our products or our ability to manage normal commercial
relationships with our customers, suppliers and creditors. The recent continuation of a number of negative
economic factors, including constraints on the supply of credit to households, uncertainty and weakness in the
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