Fitch: Harbinger Group Inc. Ratings Unaffected by Joint Venture Announcement

  Fitch: Harbinger Group Inc. Ratings Unaffected by Joint Venture Announcement

Business Wire

CHICAGO -- November 07, 2012

Harbinger Group Inc.'s (HRG) 'B' Issuer Default Rating (IDR) is unaffected by
HRG's recent announcement that it will establish an oil and gas joint venture
with EXCO Resources (EXCO).

HRG will acquire a 75% limited partnership interest and a 50% general
partnership interest in the joint venture, while EXCO will acquire a 25% and
50% interest, respectively. Under the terms of the transaction HRG will
provide $373 million in cash towards the purchase of properties for the joint
venture.

Fitch views the transaction as in line with HRG's primary strategy to deploy
its existing parent company cash and short-term investments to acquire and
grow attractive businesses that generate sustainable free cash flow. The joint
venture is expected to start distributing sustainable free cash flow to the
partners shortly after the transaction is completed. HRG believes the
transaction is expected to close in early 2013.

The initial effect on covenant tests related to HRG's senior secured debt and
preferred shares is expected to be minimal.

Key rating triggers that could lead to a downgrade include a reduction in F&G
Life's ordinary statutory dividend capacity to below $40 million, a change in
SPB's strategy to reduce leverage to between 2.5x to 3.5x within 18 to 24
months, an increase in consolidated leverage to the 6x range, an increase in
HRG (parent only) financial leverage ratio to above 70%, and the deployment of
existing cash balances that increases the enterprise's credit risk.

Key rating triggers that could lead to an upgrade include an significant
increase in F&G Life's ordinary statutory dividend capacity from its current
level of approximately $80 million, a reduction in consolidated leverage to
the 4x range, a reduction in HRG (parent only) financial leverage ratio below
40%, and the deployment of existing cash balances that improves the magnitude
and diversity of cash flows to HRG.

HRG is a NYSE-traded holding company that is majority owned by investment
funds affiliated with Harbinger Capital Partners LLC (Harbinger). Harbinger
established HRG as a permanent capital vehicle to obtain controlling equity
interests in established, dividend paying businesses that operate across a
diversified set of industries. The company currently operates in three
business segments: consumer products through its 57.5% ownership in SPB,
insurance through its wholly owned subsidiary F&G Life, and Salus, an asset
based lending business.

Fitch rates Harbinger as follows:

--Long-Term IDR 'B';

--$500 million 10.625% senior secured notes 'B/RR4'.

The Rating Outlook is Stable.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research

--'Insurance Rating Methodology' (Oct. 18, 2012);

--'Corporate Rating Methodology' (Aug. 8, 2012).

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Contact:

Fitch Ratings
Primary Analyst:
Bruce E. Cox, +1-312-606-2316
Director
Fitch, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst:
Douglas L. Meyer, CFA, +1-312-368-2061
Managing Director
or
Committee Chairperson:
Julie A. Burke, CPA, CFA, +1-312-368-3158
Managing Director
or
Brian Bertsch, +1-212-908-0549
New York, Media Relations
brian.bertsch@fitchratings.com