S&P puts GE on watch

S&P said it placed General Electric Co.’s ratings on CreditWatch with negative implications, following the announcement it plans to separate into three separate companies.

GE said it plans to execute tax-free spinoffs of GE Healthcare in early 2023 and its renewable energy and power company in early 2024. As part of the health care spin-off, GE plans to keep a 19.9% stake in GE Healthcare. The company also intends for GE Healthcare to sell debt securities and use the proceeds to pay down GE debt.

“GE has not disclosed the expected capital structure at GE Healthcare. We plan to provide updates on our CreditWatch once more details are available, including potential cash proceeds from the spin-off and its impact on GE's credit metrics. Upon CreditWatch resolution, we could affirm the rating if proceeds from the health care separation would support sufficient deleveraging such that total debt to EBITDA declines below 2.5x by fiscal 2023 and is sustained there,” S&P said in a press release.

The agency said it plans to resolve the CreditWatch once it has more details on the effect of the health care separation on GE's financial risk profile and potential for debt reduction.

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