Spectrum Brands Holdings, Inc. (NYSE: SPB; “Parent”), announced
today that its wholly-owned subsidiary, Spectrum Brands, Inc.
(“Spectrum Brands” or the “Company”) intends to offer, subject to
market and other conditions, $300 million in aggregate principal
amount of exchangeable senior notes due 2029 (the “Exchangeable
Notes”) and a share repurchase plan.
The Company intends to use a portion of the net proceeds of the
Exchangeable Notes offering (i) to fund the cost of entering into
the capped call transactions (as described below), (ii) to
repurchase up to $100 million of shares of common stock of Parent
(“Parent Common Stock”) concurrently with the pricing of the
offering of the Exchangeable Notes in privately negotiated
transactions effected through one of the initial purchasers or its
affiliates and (iii) for general corporate purposes.
In connection with the Exchangeable Notes offering, if the
initial purchasers sell more Exchangeable Notes than the total
principal amount of the Exchangeable Notes set forth above, the
Company expects to grant the initial purchasers the option to
purchase, for settlement within a 13-day period beginning on, and
including, the date the Exchangeable Notes are first issued, up to
an additional $50 million aggregate principal amount of
Exchangeable Notes. If the initial purchasers exercise their option
to purchase additional Exchangeable Notes, then the Company intends
to use a portion of the additional net proceeds to fund the cost of
entering into additional capped call transactions (as described
below) and the remaining net proceeds for general corporate
purposes.
The Exchangeable Notes will accrue interest payable
semi-annually in arrears and will mature on June 1, 2029, unless
repurchased, redeemed or exchanged in accordance with their terms
prior to such date. Prior to March 1, 2029, the Exchangeable Notes
will be exchangeable only upon satisfaction of certain conditions
and during certain periods; thereafter, the Exchangeable Notes will
be exchangeable at any time until the close of business on the
second scheduled trading day immediately before the maturity date.
Upon exchange of the Exchangeable Notes, the Company will pay cash,
up to the aggregate principal amount of the Exchangeable Notes to
be exchanged, and pay or deliver, as the case may be, cash, shares
of Parent Common Stock or a combination of cash and shares of
Parent Common Stock, at the Company’s election, in respect of the
remainder, if any, of the Company’s exchange obligation in excess
of the aggregate principal amount of Exchangeable Notes being
exchanged. The Exchangeable Notes will be guaranteed, on a full,
joint and several basis, by Parent and, subject to certain
exceptions, each of the Company’s existing and future domestic
subsidiaries that guarantee the Company’s or the Parent’s
obligations under any of their respective existing or future senior
unsecured notes or convertible or exchangeable notes.
Holders of the Exchangeable Notes will have the right to require
the Company to repurchase all or a portion of their Exchangeable
Notes at 100% of their principal amount, plus any accrued and
unpaid interest, upon the occurrence of certain corporate events
constituting a “fundamental change” as defined in the indenture
governing the Exchangeable Notes. The Company may not redeem the
Exchangeable Notes prior to June 7, 2027. The Company may redeem
for cash all or any portion of the Exchangeable Notes, at its
option, on a redemption date occurring on or after June 7, 2027 and
on or before the 41st scheduled trading day immediately before the
maturity date, but only if (A) the notes are “freely tradable” as
defined in the indenture (unless the Company elects for cash
settlement to apply to all exchanges of the Exchangeable Notes with
an exchange date that occurs on or after the date the Company sends
such redemption notice and on or before the second scheduled
trading day immediately before the related redemption date) and any
accrued and unpaid additional interest through the most recent
interest payment date has been paid as of the date the Company
sends the related redemption notice and (B) the last reported sale
price of Parent Common Stock has been at least 130% of the exchange
price then in effect for a specified period of time. The redemption
price will equal 100% of the principal amount of the Exchangeable
Notes to be redeemed, plus any accrued and unpaid interest to, but
excluding, the redemption date.
In connection with the pricing of the Exchangeable Notes, the
Parent expects to enter into share repurchases at a cash purchase
price per share equal to the closing price per share of the Parent
Common Stock on the pricing date of the Exchangeable Notes. The
Company expects that one of the initial purchasers and/or its
affiliate will purchase the shares from purchasers of Exchangeable
Notes in the offering and will sell the shares to the Parent at
closing. These share repurchases could increase (or reduce the size
of any decrease in) the market price of the Parent Common Stock or
the Exchangeable Notes. The share repurchases could affect the
market price of the Parent Common Stock concurrently with the
pricing of the Exchangeable Notes, and could also result in a
higher effective exchange price for the Exchangeable Notes.
In connection with the pricing of the Exchangeable Notes, the
Company also expects to enter into privately negotiated capped call
transactions with one or more of the initial purchasers or their
affiliates and/or other financial institutions (the “option
counterparties”). The capped call transactions are expected to
initially cover, subject to anti-dilution adjustments substantially
similar to those applicable to the Exchangeable Notes, the number
of shares of Parent Common Stock underlying the Exchangeable Notes.
If the initial purchasers exercise their option to purchase
additional Exchangeable Notes, the Company expects to enter into
additional capped call transactions with the option
counterparties.
The capped call transactions are expected generally to reduce
the potential dilution to Parent Common Stock upon any exchange of
the Exchangeable Notes and/or offset any potential cash payments
the Company is required to make in excess of the principal amount
of exchanged notes, as the case may be. If, however, the market
price per share of Parent Common Stock, as measured under the terms
of the capped call transactions, exceeds the cap price of the
capped call transactions, there would nevertheless be dilution
and/or there would not be an offset of such potential cash
payments, in each case, to the extent that such market price
exceeds the cap price of the capped call transactions.
In connection with establishing their initial hedges of the
capped call transactions, the option counterparties or their
respective affiliates expect to enter into various derivative
transactions with respect to Parent Common Stock and/or purchase
shares of Parent Common Stock concurrently with or shortly after
the pricing of the Exchangeable Notes. This activity could increase
(or reduce the size of any decrease in) the market price of Parent
Common Stock or the Exchangeable Notes at that time. In addition,
the option counterparties or their respective affiliates may modify
their hedge positions by entering into or unwinding various
derivatives with respect to Parent Common Stock and/or purchasing
or selling shares of Parent Common Stock or other securities in
secondary market transactions following the pricing of the
Exchangeable Notes and prior to the maturity of the Exchangeable
Notes (and are likely to do so (x) during any observation period
related to an exchange of the Exchangeable Notes, following any
redemption of the Exchangeable Notes by the Company or following
any repurchase of Exchangeable Notes by the Company in connection
with any fundamental change and (y) following any repurchase of the
Exchangeable Notes by the Company other than in connection with any
such redemption or any fundamental change if the Company elects to
unwind a corresponding portion of the capped call transactions in
connection with such repurchase). This activity could also cause or
avoid an increase or a decrease in the market price of Parent
Common Stock or the Exchangeable Notes, which could affect the
holders’ ability to exchange the Exchangeable Notes and, to the
extent the activity occurs following exchange or during any
observation period related to an exchange of the Exchangeable
Notes, it could affect the amount and value of the consideration
that holders will receive upon exchange of the Exchangeable
Notes.
The Exchangeable Notes will be offered through a private
placement, and the offer and sale of the Exchangeable Notes, the
guarantees and the shares of Parent Common Stock, if any,
deliverable upon exchange of the Exchangeable Notes will not be
registered under the Securities Act of 1933, as amended (the
“Securities Act”), or any state securities law. The Exchangeable
Notes and the shares of Parent Common Stock, if any, deliverable
upon exchange of the Exchangeable Notes may not be offered or sold
in the United States absent registration or an applicable exemption
from registration under the Securities Act and applicable state
securities laws. Accordingly, the Exchangeable Notes will be
offered only to persons reasonably believed to be “qualified
institutional buyers” under Rule 144A of the Securities Act.
The Parent also announced that its Board of Directors has
authorized a new $500 million Parent Common Stock repurchase
program. The Company intends to use up to $100 million of this
program to purchase shares of Parent Common Stock concurrently with
the pricing of the offering of the Exchangeable Notes in privately
negotiated transactions effected through one of the initial
purchasers and/or its affiliates. The Parent Common Stock
repurchase authorization is effective immediately and replaces an
existing program, which had a remaining available authorization of
approximately $80 million. Purchases under the program may be made
in the open market or in privately negotiated transactions from
time to time at management’s discretion. The repurchase program may
be suspended or discontinued at any time.
This news release shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
About Spectrum Brands Holdings, Inc. and Spectrum Brands,
Inc.
Spectrum Brands Holdings, Inc. is a home-essentials company with
a mission to make living better at home. We focus on delivering
innovative products and solutions to consumers for use in and
around the home through our trusted brands. We are a leading
supplier of specialty pet supplies, lawn and garden and home pest
control products, personal insect repellents, shaving and grooming
products, personal care products, and small household appliances.
Helping to meet the needs of consumers worldwide, Spectrum Brands
offers a broad portfolio of market-leading, well-known and widely
trusted brands including Tetra®, DreamBone®, SmartBones®, Nature’s
Miracle®, 8-in-1®, FURminator®, Healthy-Hide®, Good Boy®, Meowee!®,
OmegaOne®, Spectracide®, Cutter®, Repel®, Hot Shot®, Rejuvenate®,
Black Flag®, Liquid Fence®, Remington®, George Foreman®, Russell
Hobbs®, Black + Decker®, PowerXL®, Emeril Lagasse®, and Copper
Chef®. For more information, please visit www.spectrumbrands.com.
Spectrum Brands – A Home Essentials Company™.
Forward-looking Statements
We have made or implied certain forward-looking statements in
this news release and may make additional oral forward-looking
statements from time to time. All statements, other than statements
of historical facts included or incorporated by reference in this
document, including, without limitation, statements or expectations
regarding our business strategy, future operations, financial
condition, estimated revenues, projected costs, inventory
management, earnings power, projected synergies, prospects, plans
and objectives of management, outcome of any litigation and
information concerning expected actions of third parties are
forward-looking statements. When used in this document, the words
future, anticipate, pro forma, seek, intend, plan, envision,
estimate, believe, belief, expect, project, forecast, outlook,
earnings framework, goal, target, could, would, will, can, should,
may and similar expressions are intended to identify
forward-looking statements, although not all forward-looking
statements contain such identifying words.
Since these forward-looking statements are based upon our
current expectations of future events and projections and are
subject to a number of risks and uncertainties, many of which are
beyond our control and some of which may change rapidly, actual
results or outcomes may differ materially from those expressed or
implied herein, and you should not place undue reliance on these
statements. Important factors that could cause our actual results
to differ materially from those expressed or implied herein
include, without limitation: (1) the economic, social and political
conditions or civil unrest, terrorist attacks, acts of war, natural
disasters, other public health concerns or unrest in the United
States or the international markets impacting our business,
customers, employees (including our ability to retain and attract
key personnel), manufacturing facilities, suppliers, capital
markets, financial condition and results of operations, all of
which tend to aggravate the other risks and uncertainties we face;
(2) the impact of a number of local, regional and global
uncertainties could negatively impact our business; (3) the
negative effect of the Russia-Ukraine war and the Israel-Hamas war
and their impact on those regions and surrounding regions,
including the Middle East, and on our operations and operations of
our customers, suppliers and other stakeholders; (4) our increased
reliance on third-party partners, suppliers and distributors to
achieve our business objectives; (5) the impact of expenses
resulting from the implementation of new business strategies,
divestitures or current and proposed restructuring and optimization
activities, including changes in inventory and distribution center
changes which are complicated and involve coordination among a
number of stakeholders, including our suppliers and transportation
and logistics handlers; (6) the impact of our indebtedness and
financial leverage position on our business, financial condition
and results of operations; (7) the impact of restrictions in our
debt instruments on our ability to operate our business, finance
our capital needs or pursue or expand business strategies; (8) any
failure to comply with financial covenants and other provisions and
restrictions of our debt instruments; (9) the effects of general
economic conditions, including the impact of, and changes to
tariffs and trade policies, inflation, recession or fears of a
recession, depression or fears of a depression, labor costs and
stock market volatility or monetary or fiscal policies in the
countries where we do business; (10) the impact of fluctuations in
transportation and shipment costs, fuel costs, commodity prices,
costs or availability of raw materials or terms and conditions
available from suppliers, including suppliers’ willingness to
advance credit; (11) interest rate fluctuations; (12) changes in
foreign currency exchange rates that may impact our purchasing
power, pricing and margin realization within international
jurisdictions; (13) the loss of, significant reduction in or
dependence upon, sales to any significant retail customer(s),
including their changes in retail inventory levels and management
thereof; (14) competitive promotional activity or spending by
competitors, or price reductions by competitors; (15) the
introduction of new product features or technological developments
by competitors and/or the development of new competitors or
competitive brands; (16) changes in consumer spending preferences
and demand for our products, particularly in light of economic
stress; (17) our ability to develop and successfully introduce new
products, protect intellectual property and avoid infringing the
intellectual property of third parties; (18) our ability to
successfully identify, implement, achieve and sustain productivity
improvements, cost efficiencies (including at our manufacturing and
distribution operations) and cost savings; (19) the seasonal nature
of sales of certain of our products; (20) the impact weather
conditions may have on the sales of certain of our products; (21)
the effects of climate change and unusual weather activity as well
as our ability to respond to future natural disasters and pandemics
and to meet our environmental, social and governance goals; (22)
the cost and effect of unanticipated legal, tax or regulatory
proceedings or new laws or regulations (including environmental,
public health and consumer protection regulations); (23) public
perception regarding the safety of products that we manufacture and
sell, including the potential for environmental liabilities,
product liability claims, litigation and other claims related to
products manufactured by us and third parties; (24) the impact of
existing, pending or threatened litigation, government regulation
or other requirements or operating standards applicable to our
business; (25) the impact of cybersecurity breaches or our actual
or perceived failure to protect company and personal data,
including our failure to comply with new and increasingly complex
global data privacy regulations; (26) changes in accounting
policies applicable to our business; (27) our discretion to adopt,
conduct, suspend or discontinue any share repurchase program or
conduct any debt repayments, redemptions, repurchases or
refinancing transactions (including our discretion to conduct
purchases or repurchases, if any, in a variety of manners including
open-market purchases, privately negotiated transactions, tender
offers, redemptions, or otherwise); (28) our ability to utilize net
operating loss carry-forwards to offset tax liabilities; (29) our
ability to separate the Company’s HPC business and create an
independent Global Appliances business on expected terms, and
within the anticipated time period, or at all, and to realize the
potential benefits of such business; (30) our ability to create a
pure play consumer products company composed of our Global Pet Care
and Home & Garden business and to realize the expected benefits
of such creation, and within the anticipated time period, or at
all; (31) our ability to successfully implement, and realize the
benefits of, acquisitions or dispositions and the impact of any
such transactions on our financial performance; (32) the impact of
actions taken by significant shareholders; and (33) the
unanticipated loss of key members of senior management and the
transition of new members of our management teams to their new
roles; and (34) the other risk factors set forth in the securities
filings of Spectrum Brands Holdings, Inc. and SB/RH Holdings, LLC,
including the 2023 Annual Report and subsequent Quarterly Reports
on Form 10-Q.
Some of the above-mentioned factors are described in further
detail in the sections entitled Risk Factors in our annual and
quarterly reports, as applicable. You should assume the information
appearing in this document is accurate only as of the end of the
period covered by this document, or as otherwise specified, as our
business, financial condition, results of operations and prospects
may have changed since that date. Except as required by applicable
law, including the securities laws of the United States and the
rules and regulations of the United States Securities and Exchange
Commission, we undertake no obligation to publicly update or revise
any forward-looking statement, whether as a result of new
information, future events or otherwise, to reflect actual results
or changes in factors or assumptions affecting such forward-looking
statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20240519152515/en/
Investor/Media Contact: Joanne Chomiak
608-275-4458
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