Fitch moves L3Harris view to negative

Fitch Ratings said it revised the outlook for L3Harris Technologies (LHX) and L3 Technologies Inc. to negative from stable and affirmed their ratings, including the BBB+ senior unsecured notes ratings.

LHX plans to buy Aerojet Rocketdyne (AJRD) for $4.7 billion, financed primarily with new debt and likely closing in the second half of 2023.

“The negative outlook reflects the elevated post-transaction leverage profile with pro forma initial EBITDA leverage around 4x. Fitch currently forecasts EBITDA leverage will likely remain outside of its current 2.5x negative sensitivity for around two years following the transaction. Integration risks are also heightened as AJRD has experienced moderate operational and supply chain constraints in recent quarters, and it may take LHX time to fully evaluate any manufacturing challenges that may arise due to the differences with its current portfolio.

“LHX is also in the process of closing a separate transaction, the $2 billion debt-funded acquisition of Viasat's tactical data links (TDL) business which could compound integration challenges,” the agency said in a press release.

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