FMC Corp. Rtgs Affirmed by S&P After Anncmnt of Sale.NEW YORK--(BUSINESS WIRE)-- Standard & Poor's CreditWire 8/26/97 -- Standard & Poor's today affirmed its ratings of FMC See fixed mobile convergence. Corp. as indicated in the list below. About $1.8 billion of debt is outstanding. FMC's ratings reflect prospects for sustaining adequate levels of internal cash generation, offsetting current high debt leverage. The firm has just announced the sale of joint venture United Defense L.P., a manufacturer of tracked vehicles and artillery systems. FMC will receive $510 million gross proceeds for its 60% share of the unit. Standard & Poor's anticipates that management will deploy the proceeds in ways consistent with preserving current credit quality. Chicago, Ill.-based FMC's leading market positions, favorable cost structures, and adequate diversification in industrial and specialty chemicals A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. and in specialized machinery buffer the company's exposure to economic downturns. Also, a carefully executed acquisition program is enhancing growth and profitability. Overall, business conditions are improving, and tight cost controls should bolster FMC's internal cash generation. Over the business 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 total debt is expected to average in the 35%-45% range. The balance sheet remains highly leveraged, with debt to total capital in the high-60% area. Although internal cash generation could allow significant debt repayment, this has not occurred due to acquisitions and to substantial capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. needs. Nevertheless, continued growth in owners' equity owners' equity The owners' interest in the assets of a business. Owners' equity includes the amount invested by the owners plus the profits (or minus the losses) in the enterprise. Owners' equity and liabilities are used to finance a firm's assets. through earnings retention should mitigate the effect of additional borrowings on debt leverage. Also, flexibility to raise cash through asset sales reduces financial risk. OUTLOOK: STABLE Credit quality is constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. by investment needs to expand existing operations. Management is expected to temper outlays so as to maintain current credit quality should business conditions soften. -- CreditWire -0-
RATINGS AFFIRMED
FMC Corp.
Corp credit rtg BBB
Sr unsecd debt BBB
IRBs BBB
Sub debt BBB-
CP prog A-2
-0-
Copyright 1997, Standard & Poor's Rating Services
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