UPDATE 1-Spectrum Brands exits bankruptcy

Fri Aug 28, 2009 6:45pm EDT

*Company reduces debt by $840 million

*Old common shares canceled

*Bondholders to get new stock, notes

LOS ANGELES, Aug 28 (Reuters) - Spectrum Brands Inc SPCBQ.PK, the maker of Rayovac batteries and Remington shavers, on Friday emerged from bankruptcy and closed on its $242 million exit financing facility after meeting closing conditions in its reorganization plan.

Spectrum said it eliminated $840 million of subordinated debt in the Chapter 11 reorganization, and exits with substantially improved capital structure.

Spectrum filed for bankruptcy protection in February after coming under pressure following acquisitions of garden and pet product businesses.

The company expects to process and pay valid pre-petition supplier claims within the next few weeks and to pay in full all suppliers who have not already been paid.

Under the reorganization plan, the company's common shares were canceled and its former shareholders will get nothing, the company said.

Bondholders are being issued a total of about 27 million shares of new common stock and $218 million in 12 percent senior subordinated toggle notes due 2019.

A toggle note gives the issuer the option of deferring an interest payment by increasing the value of the coupon in the future, according to online financial dictionary investopedia.com.

The new shares are expected to trade initially in the pink sheets, and Spectrum expects to begin the process of seeking a listing on an exchange later this year or in early 2010.

Spectrum Chief Executive Kent Hussey said he was "very pleased" with the results of the restructuring.

"We have achieved significant debt reduction while maintaining our string brand reputations and solid relationships with our suppliers and customers," Hussey said in a statement. (Reporting by Gina Keating; editing by Carol Bishopric)