Moody's: GenCorp on review for downgrade

Moody's Investors Service placed the debt ratings (Ba3 senior implied) of GenCorp Inc. under review for possible downgrade considering the company's recently announced financial results for the first half of fiscal 2004 (ending May 31), which indicated weaker than expected operating performance and included a $261 million one-time charge to reduce the carrying value of the operations of its GDX automotive business which is slated for sale.

Moody's said the sale of GDX, which represents about 66% of the company's fiscal 2003 revenue, will result in a company with a much smaller remaining operating size, but in segments that are more likely to provide stable profitability and revenue growth prospects over the long term.

Moody's rates GenCorp's $279 million senior secured credit facilities at Ba2, $150 million senior subordinated notes due 2013 at B2, $150 million 5.75% convertible subordinated notes due 2007 at B3, $125 million 4% contingent convertible subordinated notes due 2024 at B3, senior implied rating at Ba3 and senior unsecured issuer rating at B2.

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