Fitch: No Rating Action on Spectrum's Announced Sale

Business Wire, May 21, 2008

NEW YORK -- Following today's announcement that Spectrum Brands (Spectrum) has signed a definitive agreement with Salton, Inc. for the sale of its Global Pet Business for approximately $692.5 million in cash and an aggregate principal amount of Spectrum's subordinated debt securities equal to $222.5 million, Fitch affirms Spectrum Brands, Inc. (SPC) ratings as follows:

--Issuer Default Rating (IDR) at 'CCC';

--$1 billion term loan B at 'B/RR1';

--$225 million ABL at 'B/RR1';

--Eur350 million term loan at 'B/RR1';

--$700 million 7.4% senior sub note at 'CCC-/RR5';

--$2.9 million 8.5% senior sub note at 'CCC-/RR5';

--$347 million 11.25% variable rate toggle senior sub note at 'CCC-/RR5'

The Rating Outlook is Negative.

The ratings reflect SPC's high leverage and thin coverage metrics on a pro-forma basis despite the significant decline in debt levels expected upon the transaction close. On a pro-forma last 12-month basis adjusting for the Lawn & Garden segment which is now being recorded as part of continuing operations, leverage (gross debt/EBITDA) would improve modestly to 8.4 times (x) from approximately 8.9x at March 31, 2008 and interest coverage on an EBITDA basis will remain basically flat at 1.25x. Overall, the change in credit metrics shows marginal improvement. Further, Pet represents approximately a third of EBITDA before corporate overhead and is a steady year-round performer which improves the company's earnings quality. While the remaining businesses have offsetting seasonality, the company's business profile is not as strong with the sale of the Pet segment, in Fitch's view. The rating takes into account Spectrum's adequate liquidity, more financial flexibility within its indenture covenants, and an expectation that operations in the remaining businesses will be sustained.

The Negative Outlook encompasses the deterioration in financial and credit protection measures since 2005, a modest increase in business risk with this transaction, and the potential that other actions may take place as the company executes its plans to improve its capital structure, which may include other asset sales. Fitch will be reviewing Spectrum's performance over the summer and holiday season to gain a better understanding of the company's profitability and cash flow going forward.

Spectrum is a global branded consumer products company with operations in seven product categories: consumer batteries; lawn and garden; pet supplies; electric shaving and grooming; household insect control; electric personal care products; and portable lighting.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.