Fitch Raises United Defense's Senior Secured Rating To `BB'.Business Editors & Government Writers NEW YORK--(BUSINESS WIRE)--Jan. 7, 2002 Fitch raises United Defense Industries Inc.'s (UDI (1) (Unified Display Interface) A digital interface from the United Display Interface SIG that is designed to replace the analog VGA interface common on CRTs and flat panel monitors. UDI is expected to provide backward compatibility with DVI and HDMI interfaces. ) senior secured rating to 'BB' from 'BB-'. The Rating Outlook is Positive. The rating upgrade reflects the company's repayment of approximately $163 million of senior secured debt from its initial public offering (IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. ). In December 2001, UDI and selling shareholders received approximately $401 million in gross proceeds from its IPO. UDI sold 9.25 million shares and Carlyle sold 11.85 million shares to the public at a share price of approximately $19. As a result of the offering and free cash flow, UDI reduced its senior secured term loans by about $169 million to about $431 million. Following the IPO and debt reduction, total debt to EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become improved to about 2.7 times (x) from approximately 3.7x at Sept. 30, 2001. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma interest coverage strengthened to an estimated range of 3.5 to 4.0x. The company's operating performance for the nine months ended Sept. 30, 2001 was moderately below expectations. However, the unfavorable variances appear to be primarily attributable to timing differences. Funded backlog increased to approximately $2 billion at Sept. 30, 2001 from $1.8 billion at Sept. 30, 2000. The Rating Outlook Positive relies on continued improvement in the company's leverage position through free cash flow. The Rating Outlook also reflects the company's additional financial flexibility by having access to the public equity market and the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. trend in defense procurement. However, Fitch acknowledges that UDI's program concentration and inherent political risk in its business continue to constrain 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. the senior secured rating. UDI designs, manufactures and supplies tracked armored combat vehicles and weapons systems for the U.S. military and the militaries of certain allied governments. The company is a sole-source/prime contractor for a number of important defense programs including the Bradley family of vehicles, the M113 troop transport vehicle, the M88 tank recovery vehicle, the M109 self-propelled howitzer howitzer: see artillery. and the Crusader. |
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