AAR Corp. Rtgs Upgraded by S&P; BBB Bank Ln Rtg Assigned.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 7/3/97-- Standard & Poor's today has raised its corporate credit and senior debt ratings of AAR Aar, river: see Aare. Corp. to triple-`B' from triple-`B'-minus. The rating outlook is now stable. At the same time, Standard & Poor's has assigned its triple-`B' rating to AAR's $60 million unsecured revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facilities expiring Aug. 31, 1999, with annual extension available upon request. The facilities are convertible into 5-year term loans. The upgrade is based on a continued improvement in financial results, material strengthening in key credit protection measures, and expectations that performance will trend upward, supported by favorable overall industry conditions. Ratings on Wood Dale, Ill.-based AAR are supported by its established business position, successful trading operations, and moderate financial policy, but are limited by the price competitive characteristics of the industry in which the firm operates. The company is a leading supplier of parts, equipment, and services encompassing trading, overhaul, and manufacturing within the aerospace/aviation aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. . This market is highly competitive, moderately cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. , and dominated by original equipment manufacturers and airlines. After a severe and prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. aviation downturn, demand for AAR's services has been gaining momentum in recent periods. This reflects global air traffic growth, healthy airline industry profitability, benefits of an expanding fleet (and related fleet movement and turnover), and outsourcing by carriers as they strive to reduce costs. Those trends resulted in solid gains in sales and profits for AAR, although earnings measures are still below the peak levels of the last cycle. Funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. to debt, currently close to 30%, is anticipated to increase to 30%-35% in the next two years. Debt to capital averages in the 35%-40% range, strong for the rating category. Proceeds of an early 1997 common stock offering are being used to expand operations. Growth entails significant working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. , but capital expenditures are fairly low, easing overall cash needs. OUTLOOK: Stable. An improved market environment, coupled with AAR's broadened capabilities and customer base, should maintain a credit profile consistent with the rating, Standard & Poor's said. --- CreditWire CONTACT: Roman Szuper, 212/208-8856 |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion