Spectrum Brands Madison headquarters file photo

The sign outside the Spectrum Brands building at 601 Rayovac Drive has been updated to reflect the world headquarters designation, which was announced in April 2010.

MICHELLE STOCKER – The Capital Times

Comsumer products company Spectrum Brands, which just landed an $4 million forgivable loan from the state to keep its corporate headquarters in Madison, is actually domiciled in Delaware.

The former Rayovac Corp. made the change in 2009, according to documents with the state Department of Financial Institutions.

DFI's website lists the firm's principal office at 601 Rayovac Drive in Madison but shows Delaware as its home state.

Officials with the Wisconsin Economic Development Corporation say they were aware of Spectrum's status but say it did not impact a decision on the loan. The loan does not need to be repaid if Spectrum maintains 470 jobs in Madison and invests $40 million in its state operations by Oct. 1, 2016.

"Domiciled and headquartered are two different things," says WEDC spokesman Tom Thieding. "It doesn't matter where they have the corporation legally filed."

Delaware is well-known as the country's corporate tax haven, with over half of U.S. publicly held corporations registered there, including 58 percent of the Fortune 500, according to City-Data.com.

Firms are attracted by Delaware's tax exemption on holding company subsidiaries, along with its corporate-friendly court system. Delaware does not use a citizen jury for corporate liability cases but rather relies on the findings of a judge.

"Soon after our emergence from voluntary bankruptcy in August 2009 there was a decision made to incorporate in Delaware to avail the company of the extensive body of established corporate law that is widely viewed to be available in that jurisdiction," explains Spectrum spokesman Dave Prichard in an email.

It's unclear whether Spectrum, whose brands include Remington and Black & Decker, pays corporate income taxes in Wisconsin since those records are not readily available to the public. Spectrum officials did not immediately respond to that question.

City of Madison records do show $323,941 in property taxes paid in 2010 for property located at 601 Rayovac Drive. The property is valued at $14.8 million and owned by an LLC out of White Plains, N.Y., according to city records. 

Under the loan deal with the state Spectrum does not have to repay its debt but is responsible for $80,000 in fees to the WEDC. If it doesn't meet terms of the agreement by 2016, Spectrum would need to repay whatever amount is deemed due, along with interest payments of 2 percent.

Sixty jobs the company plans to move to Madison are largely related to Spectrum's acquisition of small appliance company Russell Hobbs last year and relocation of those operations from Florida. Russell Hobbs brands include Black & Decker, George Foreman and Toastmaster.

"A few folks did choose to relocate but unfortunately those positions were eliminated," says Prichard.

The company, which had been owned by Madison's Pyle family before it was sold in 1996 to the Thomas H. Lee Company, which took it public in a stock offering.

The new owners went on a buying binge of brands, from shavers to pet supplies, and expanded into foreign markets. In 2005, the name was changed from Rayovac to Spectrum Brands under the symbol SPC.

Not every move panned out.

In 2009, Spectrum Brands restructured through a Chapter 11 bankruptcy filing, which eliminated more than $800 million in debt. It issued new stock under the symbol SPB, which now trades on the New York Stock Exchange.

For its last quarter, ended Sept. 30, Spectrum reported a loss of $33.8 million or 65 cents a share compared to a loss of 48 cents for the same period in 2010. Sales did increase 4.9 percent to $827.3 million.

Shares of Spectrum traded as high as $36 in January 2011 but fell to $20 by early August. The stock has rebounded since, closing Wednesday at $28.02.

Despite its financial struggles, Spectrum still managed to pay out some $20 million in bonuses and stock awards last year, including $10.6 million to former CEO Kent Hussey, who retired last year.