ATLANTA, Feb 23 (Reuters) - A Spectrum Brands investor blasted the company's bankruptcy reorganization plan on Monday, saying the company was engaging in an 'obscene dereliction of fiduciary duty' by sacrificing the economic interest of shareholders to the benefit of private equity noteholders.
Mittleman Brothers LLC, which said it controls entities that own 5.02 percent of Spectrum Brands outstanding stock, asked the Spectrum Brands board to appoint a panel of equity security holders and to negotiate a 'new, fair and equitable' reorganization plan.
'It is unconscionable that you would put forth this plan which seeks to preemptively disenfranchise existing shareholders' at a time when Spectrum products are gaining share and certain financial measures are forecast to improve, wrote Christopher Mittleman, managing partner of Mittleman Brothers LLC, in a letter to Spectrum's board.
Mittleman's letter, included in a Securities and Exchange Commission filing on Monday, also said the plan raises a potential conflict of interest as it allows management's equity position 'to be potentially preserved if not enhanced.'
Spectrum, the maker of Rayovac batteries and Remington shavers, and its U.S. subsidiaries filed voluntary petitions for Chapter 11 reorganization on Feb. 3, saying it had reached agreement with noteholders representing about 70 percent of its outstanding bonds to pursue a refinancing.
At the time, the company said it expects to reduce debt by about one-third and decrease its annual cash interest obligations by about $95 million for each of the next two years. It expects to emerge from bankruptcy in four to six months.
Should the company not withdraw the plan, Mittleman said it was prepared to ask that the U.S. Trustee appoint an equity committee and file a motion in bankruptcy court forcing such appointment.
(Reporting by Karen Jacobs; Editing by Bernard Orr) Keywords: SPECTRUMBRANDS/ (karen.jacobs@thomsonreuters.com; + 1 404 493-3656; Reuters Messaging: karen.jacobs.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Mittleman Brothers LLC, which said it controls entities that own 5.02 percent of Spectrum Brands outstanding stock, asked the Spectrum Brands board to appoint a panel of equity security holders and to negotiate a 'new, fair and equitable' reorganization plan.
'It is unconscionable that you would put forth this plan which seeks to preemptively disenfranchise existing shareholders' at a time when Spectrum products are gaining share and certain financial measures are forecast to improve, wrote Christopher Mittleman, managing partner of Mittleman Brothers LLC, in a letter to Spectrum's board.
Mittleman's letter, included in a Securities and Exchange Commission filing on Monday, also said the plan raises a potential conflict of interest as it allows management's equity position 'to be potentially preserved if not enhanced.'
Spectrum, the maker of Rayovac batteries and Remington shavers, and its U.S. subsidiaries filed voluntary petitions for Chapter 11 reorganization on Feb. 3, saying it had reached agreement with noteholders representing about 70 percent of its outstanding bonds to pursue a refinancing.
At the time, the company said it expects to reduce debt by about one-third and decrease its annual cash interest obligations by about $95 million for each of the next two years. It expects to emerge from bankruptcy in four to six months.
Should the company not withdraw the plan, Mittleman said it was prepared to ask that the U.S. Trustee appoint an equity committee and file a motion in bankruptcy court forcing such appointment.
(Reporting by Karen Jacobs; Editing by Bernard Orr) Keywords: SPECTRUMBRANDS/ (karen.jacobs@thomsonreuters.com; + 1 404 493-3656; Reuters Messaging: karen.jacobs.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.