Aeroquip-Vickers Inc. Long-Term Rtgs Raised by S&P;CP Afrmd.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 6/27/97 --Standard & Poor's today has raised Aeroquip-Vickers Inc.'s (formerly Trinova Corp.) senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. rating to triple-'B'-plus from triple-'B' and its subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". rating to triple-'B' from triple-'B'-minus, affecting $250 million in rated debt. At the same time, the corporate credit rating has been raised to triple-'B'-plus from triple-'B'. The rating on the company's commercial paper program has been affirmed at 'A-2'. The outlook is stable. The upgrades reflect an improved business profile, positive prospects in key end-user markets, and expected adherence to a moderate financial policy. Aeroquip-Vickers Inc.'s ratings reflect good business positions in large, 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. markets, and a moderate financial risk. The Maumee, Ohio-based firm is a leading manufacturer of engineered components used in a very broad range of industrial, automotive, and aerospace applications. Products include engineered hose and tubing, hydraulic and electronic control devices, pumps, and motors. Although the fundamentally cyclical nature of target markets is a risk factor, the near-term outlook for the important aerospace and off-highway equipment markets is promising. Further, a sizable portion of sales, estimated at about 35%, are to the more stable aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. , limiting earnings and cash flow volatility. A recent agreement with Komatsu Ltd. of Japan is expected to significantly increase foreign sales. As a result of a shift to a more internally focused growth strategy, debt usage is expected to diminish, and leverage should average in the 40%-45% range despite a continuing moderate share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program. Profitability measures support the rating, with return on permanent capital expected to average in the mid-teens percentage range. 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 total debt will likely weaken somewhat in the next downturn, but still should average between 40% and 50% over the business cycle. OUTLOOK: Stable. The rating assumes that management will continue to balance growth objectives with maintenance of a supportive capital structure, thereby maintaining credit quality. -- CreditWire CONTACT: Steven F Bauml, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of (1) 212-208-1624 |
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