AlliedSignal, AMP Ratings Placed on S&PWatch Neg.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 8/5/98-- Standard & Poor's today placed its ratings on AlliedSignal Inc. and AMP Inc. on CreditWatch with negative implications (see list below). The CreditWatch placement follows the announcement by AlliedSignal that it intends to buy all outstanding shares of AMP for $9.8 billion in cash in an unsolicited un·so·lic·it·ed adj. Not looked for or requested; unsought: an unsolicited manuscript; unsolicited opinions. unsolicited Adjective takeover bid Noun 1. takeover bid - an offer to buy shares in order to take over the company two-tier bid - a takeover bid where the acquirer offers to pay more for the shares needed to gain control than for the remaining shares . While AlliedSignal had financial flexibility for moderate acquisition activity, a transaction of this size was not factored in the ratings. The initial phase of all-debt financing would raise AlliedSignal's debt to capital to about 70%, although subsequent planned asset sales, secondary equity offering, and internally generated cash flow should reduce debt usage. If the company is successful in acquiring AMP, AMP's commercial paper rating would be lowered to that of AlliedSignal. While AlliedSignal's previously strong credit protection measures would weaken due to substantial new debt, the combination with AMP would broaden and diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. the firm's business mix by creating a new segment. AMP (1998 sales of about $5.5 billion) is the world's leading manufacturer of electrical and electronic connection devices used in consumer and industrial, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , automotive, and personal computer industries. AlliedSignal (sales about $15 billion) has strong competitive positions in aerospace, engineered materials, and automotive markets. Standard & Poor's will meet with management to review business and financial strategies, as well as actions intended to improve the credit profile. -- CreditWire -0-
RATINGS PLACED ON CREDITWATCH WITH NEGATIVE IMPLICATIONS
Rating
AlliedSignal Inc.
Corporate credit rating A
Senior unsecured debt A
Bank loan A
Commercial paper A-1
AMP Inc.
Commercial paper A-1+
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Andrew Watt, 212/208-1885
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