Rayovac 2014 Annual Report Download - page 27

Such requirements and 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 Senior Secured Facilities, 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 our Term Loan and ABL Facility. In addition,
under the Indentures, 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—HRG and its significant stockholders 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 economic environment and related turmoil in the global financial system between 2008 and 2012 had
an impact on our business and financial condition, and we may face additional challenges if economic and
financial market conditions deteriorate in the future.
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. A number of negative economic factors, including
constraints on the supply of credit to households, uncertainty and weakness in the labor market and general
consumer fears of a new economic downturn could have a negative impact on discretionary consumer spending.
If the economy deteriorates or fails to further improve, our business could be negatively impacted, including as a
result of reduced demand for our products or supplier or customer disruptions. Any weakness in discretionary
consumer spending could have a material adverse effect on our revenues, results of operations and financial
condition. In addition, our ability to access the capital markets may be restricted at a time when it could be
necessary or beneficial to do so, which could have an impact on our flexibility to react to changing economic and
business conditions.
In the last few years, concern over continuing high unemployment, stagnant economic performance and
government debt levels in many European Union countries caused significant fluctuations of the Euro relative to
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