Salton to issue new preferreds, warrants to Harbinger in exchange for 12¼% senior notes

By Jennifer Chiou

New York, March 29 - Salton, Inc. announced that Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Fund, LP have agreed to purchase shares of a new class of Salton's preferred stock and detachable warrants to purchase 21 million shares of Salton's common stock for $100 million via an equal exchange of Salton's 12¼% senior subordinated notes due 2008 and/or second-lien notes plus any accrued interest.

The new preferred stock will have a 16% cumulative dividend payable in kind and will be redeemable six years following the closing of wholly owned subsidiary SFP Merger Sub's merger with APN Holding Co., Inc.

The warrants will have an exercise price of $2.45 per share and will expire 10 years following the closing of the merger.

Salton announced that its board approved the executed financing commitment letters delivered by APN linked to the companies' agreement and plan of merger.

Under the agreement, SFP Merger Sub will merge with and into APN, which owns all of the outstanding common shares of Applica Inc.

The commitment letters are from Silver Point Finance LLC; Bank of America NA and Banc of America Securities LLC; and Harbinger Capital Partners Master Fund and Harbinger Capital Partners Special Fund.

The commitment letter from Silver Point provides for borrowings of up to $175 million under several senior secured credit facilities, while the commitment letter from Bank of America provides for borrowings of up to $250 million under a senior secured credit facility.

Salton also announced that it has entered into a cross-licensing agreement with Applica, under which each company has granted to the other party the right to use certain brand names and other intellectual property in certain markets in exchange for specified royalties.

Applica distributes small household appliances and is based in Miramar, Fla. On Jan. 23, Applica said it had been acquired by affiliates of Harbinger Capital Partners Master Fund I and Harbinger Capital Partners Special Situations Fund.

Salton is a Lake Forest, Ill.-based small appliances, home decor and personal care products company.

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