Harbinger Group Inc. said Monday that it will sell $650 million of senior secured notes in a private placement and use some of the proceeds to refinance existing debt.
In connection with the sale of the notes, the New York-based holding company launched a tender offer to buy its outstanding $500 million of 10.625 percent senior secured notes due Nov. 15, 2015.
Harbinger said it also plans to use some of the proceeds from the debt sale for working capital and general corporate purposes, including the financing of future acquisitions and businesses.
The moves prompted Standard & Poor's Ratings Services to affirm its non-investment grade "B'' corporate credit rating for Harbinger. The outlook is "Stable."
The ratings service also assigned a "B'' issue-level rating and "3'' recovery rating to the proposed $650 million in notes, which carry an interest rate of 8 percent and are due in 2017. The "3'' recovery rating means investors can expect to recover between 50 and 70 percent of their investments in the event of default, S&P said.
S&P noted that the New York company's investment portfolio lacks diversity, though that should slowly improve through future acquisitions, and that its investment strategy is hurt by its high cost of debt.
Harbinger's holdings include Fidelity & Guaranty Life Insurance Co. and Spectrum Brands Holdings Inc., which makes Rayovac batteries and George Foreman grills.
Harbinger rose 15 cents to $9.34 in afternoon trading.