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DUFF & PHELPS LOWERS RATING ON MARTIN MARIETTA DEBT

 CHICAGO, Feb. 19 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has lowered its rating of Martin Marietta's senior debt to `A' (Single-A) from `A+' (Single-A-Plus). This downgrade affects approximately $445 million of debt securities. Additionally, we have reaffirmed Martin Marietta's commercial paper rating at Duff 1 (One). Martin Marietta's debt securities have also been removed from Rating Watch--Unfavorable.
 Our downgrade reflects the balance sheet impact of Martin Marietta's planned merger with most of the aerospace business of General Electric Company (GE Aerospace) for approximately $3.0 billion. GE Aerospace appears to be a good fit with Martin Marietta's operations and the combined entity will have a strong presence across all the military services. Most importantly, both entities are well managed and are excellent generators of cash.
 The result of the transaction will, however, cause Martin Marietta's fixed obligation ratio to rise to 46 percent from an estimated 20 percent at the end of 1992 (both excluding the impact of FASB No. 106). However, the full transaction consideration will not be borrowed as one-third ($1 billion) of the $3 billion will be in the form of convertible preferred issued to General Electric with the latter also retaining $500 million of receivables (which Martin Marietta will eventually replace). The remaining $1.5 billion will be a combination of borrowings (approximately $800 million) and assumed payment obligations relating to GE debt ($750 million). Our analysis has allowed for borrowed and assumed obligations as well as the replacing of the receivables.
 Because of the structure of the transaction and the strong cash flow generating capability of the combined entity, we expect only a modest negative impact on fixed charge coverage. Moreover, we believe Martin Marietta's management is committed to the reduction of financial leverage as quickly as is prudently possible.
 -0- 2/19/93
 /CONTACT: W. Dudley Heer of Duff & Phelps, 312-368-3123/
 (ML)


CO: Martin Marietta Corp. ST: Maryland IN: ARO SU: RTG

SM -- NY024 -- 8334 02/19/93 10:55 EST
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Publication:PR Newswire
Date:Feb 19, 1993
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