Moody's To Review GD Debt Rating

Thursday, April 26, 2001
Moody's Investors Serviced placed the debt ratings of General Dynamics Corporation (GD) under review for possible downgrade and the debt ratings of Newport News Shipbuilding Inc. (NNS) under review for possible upgrade following the announcement of a definitive agreement for GD to acquire NNS in a cash tender offer for all NNS's outstanding shares. The transaction is valued at approximately $2.6 billion, including approximately $500 million of existing NNS's debt. GD, continuing the consolidation process of the defense sector, plans to acquire NNS in a transaction which will combine its Navy shipbuilding and submarine business with the submarine and aircraft carrier businesses of NNS. This transaction would make GD the sole supplier of submarines and aircraft carriers for the U.S. Navy. Moody's review will focus on the strategic benefits of this transaction for GD as well as on the potential synergies of combining the shipyard operations of the two companies. These potential synergies will be considered in the context of any limitations or requirements that may be imposed by regulators or the DOD as part of the approval process for the transaction. In its review, Moody's will also consider the challenges which GD may face in integrating NNS into its operations, and the company's ability to avoid the difficulties that have occurred in other recent business combinations in the aerospace/defense sector. Moody's said that GD's A2 rating has been supported by its solid financial condition and strong cash flow outlook relative to its modest debt position. The proposed acquisition will more than quadruple the company's debt burden while providing less substantial increments to earnings and cash flow. Moody's review of GD's ratings will assess the financial impact that this transaction will have on GD's balance sheet and debt protection measures, given the generally favorable outlook for defense spending by the U.S. government. The rating agency will also assess the company's ability to quickly reduce the additional debt from the strong cash flow generation of its existing core business units. Furthermore, Moody's will consider the company's ongoing growth initiatives, the potential for additional large acquisitions, and the company's overall financial strategy. Moody's review of the ratings of NNS will focus on the impact that the transaction with General Dynamics would have on Newport News Shipbuilding's credit strength stemming from either implicit or explicit support from GD, including the potential for GD to legally assume or guarantee Newport News Shipbuildings Inc.'s existing debt. - (Reuters)
Maritime Reporter August 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Contracts

Rotterdam to Build New Indonesian Port

The Port of Rotterdam Authority has signed a partnership agreement with the Indonesian Port Corporation Pelindo I for the development of a new deep sea port at Kuala Tanjung near to Medan in Sumatra,

Ferguson to Build Two CalMac Ferries

Scottish minister Nicola Sturgeon have named Ferguson shipyard as the preferred bidder for a £97 million contract for the biggest new ferries on the Clyde since

ME Production Receives Two Scrubber Orders

ME Production subsidiary Marine Exhaust Technology has been awarded a new contract for the DFDS vessel Finlandia sailing on the route Rosyth-Zeebrugge. The scrubber contract includes design,

Finance

China Merchants Profit up 29pct

While China’s ports continue to face growth pressure, the country’s largest port operator is reaping the rewards of years of investments in overseas projects.   China

Baltimore Port Shipments Hit New Record

Helen Delich Bentley Port of Baltimore's public terminals shipped a record 9.74 million tons of general cargo in the 2015 fiscal year ending June 30, it said Monday.

Alaska Marine Lines Reduces Fuel Surcharge

Alaska Marine Lines, a marine transportation company providing barge service to and from Alaska and Hawaii, informs it has filed with the U.S. Surface Transportation

 
 
Maritime Contracts Naval Architecture Offshore Oil Pipelines Pod Propulsion Port Authority Salvage Ship Electronics Ship Simulators Shipbuilding / Vessel Construction
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.6816 sec (1 req/sec)