S&P: GenCorp developing

Standard & Poor's said it revised its outlook on GenCorp Inc. to developing from stable. At the same time, S&P affirmed its ratings, including the BB- corporate credit rating, on the company.

S&P said the outlook revision reflects a range of possible outcomes following GenCorp's announcement that it has reached a definitive agreement to sell its GDX Automotive unit to Cerebus Capital for $147 million. The company also announced that it will be suspending its dividend, saving $5 million a year.

GenCorp will be a significantly smaller company after the divestiture, as GDX currently comprises around 60% of revenue. However, management will be able to focus on the core propulsion business, which has better long-term prospects than the auto parts market.

Intended uses of the proceeds were not disclosed, but it is likely that GenCorp will pursue acquisitions in aerospace and defense. Any change in the ratings on GenCorp will depend on the use of the GDX proceeds, which could include acquisitions or debt repayment, the earnings contribution and financing of any acquisition targets, other strategic initiatives (including the possible sale of the fine chemicals unit), the sale or development of real estate holdings, and the performance of the remaining operations, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.