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 NEW YORK, Aug. 25 /PRNewswire/ -- Westinghouse Electric Corp.'s $275 million 6 7/8 percent senior notes due Sept. 1, 2003 and $325 million 7 7/8 percent senior debentures due Sept. 1, 2023 are rated `BBB+' by Fitch. Westinghouse Electric's `BBB+' senior debt and `BBB+' senior debt shelf registration are affirmed. The company intends to use net proceeds to reduce amounts outstanding under its revolving credit agreement, redeem certain presently callable debt, and for general corporate purposes. The credit trend is uncertain.
 In addition to Westinghouse's recent and expected operating performance, the `BBB+' senior debt rating reflects the announcement of the sale of its Distribution and Control Unit for approximately $1.1 billion, adoption of more conservative accounting for pension fund liabilities, and the reinstatement of two businesses to "continuing operations" on an accounting basis, as directed by the Securities and Exchange Commission (SEC). Debtholder protection measures are expected to remain stable in the near term. The company continues to face cyclical and noncyclical pressures that have delayed margin improvement and free cash flow generation. However, the company's strong market positions in large and diverse industrial markets remains a key credit strength.
 Last week the SEC recommended that Westinghouse reinstate two units -- The Knoll Group and Westinghouse Communities -- to continuing operations. These businesses were classified as "discontinued operations" through the application of Accounting Principals Opinion Board 30. According to SEC interpretation, both units had to be sold within one year for discontinued operations treatment. Knoll is not scheduled to be sold until next year and Westinghouse Communities until 1995. The company's decision to reinstate the units does not change its intention to sell the businesses and has no impact on cash flow. Fitch expects The Knoll Group and Westinghouse Communities can be sold over the planned three years without Westinghouse incurring substantial additional charges. However, successful completion of the expected asset sales must be accomplished in an uncertain business environment.
 Earlier this month, Westinghouse announced the sale of its Distribution and Control unit to Eaton Corp. for approximately $1.1 billion. Proceeds will be used to retire debt. The sale is subject to government approval and the waiver by Siemans A.G. of a right of first refusal pursuant to a 1988 supply contract between the two companies. Distribution and Control was classified as discontinued operations in November 1992 as part of the company's plan to exit financial services over an accelerated time horizon through the disposition of several "nonstrategic" businesses, including Distribution and Control, Westinghouse Electric Supply (WESCO), The Knoll Group, and Westinghouse Communities. Inc. WESCO is expected to be sold this year and will remain in discontinued operations.
 Separately, Westinghouse announced it will adopt a more conservative discount rate for calculating pension plan liabilities. The adjustment will reduce the rate to 8 percent from 9 percent. In addition, the company lowered its expected long-term rate of return on plan assets to 10.5 percent from 11 percent and expected rate of increase in future compensation levels to 5 percent from 6 percent. The net effect of these adjustments will increase the company's unfunded pension liability to $940 million at June 30, 1993, from $303 million at Dec. 31, 1992. Westinghouse plans to contribute $250 million to its pension plan in 1993; more than the legally required amount.
 On March 10, 1993, Fitch downgraded Westinghouse senior debt to `BBB+' from `A' as a result of the company's diminished financial flexibility resulting from large losses at the financial services subsidiary and lower-than-expected operating results.
 -0- 8/25/93
 /CONTACT: Keith B. Foley, 212-908-0572, or Nancy E. Stroker, CFA, 212-908-0533, both of Fitch/

CO: Westinghouse Electric Corp. ST: Pennsylvania IN: HOU SU: RTG

MP -- NY064 -- 5844 08/25/93 16:12 EDT
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Publication:PR Newswire
Date:Aug 25, 1993

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