S&P: Kratos view to positive

Standard & Poor's said it affirmed the B corporate credit rating on Kratos Defense & Security Solutions Inc.

The outlook was revised to positive from stable.

The outlook revision reflects the moderate reduction in leverage expectation following the company's planned $155 million acquisition of Composite Engineering Inc., S&P said.

Kratos plans to fund the purchase with the proceeds of a recent $100 million stock sale, $20 million of Kratos stock, cash on hand and revolver borrowings, the agency said.

Because the company will use only a minimal amount of debt to finance the acquisition, S&P said it expects better credit metrics than its previous expectations.

Although the acquisition improves Kratos' financial risk profile somewhat, the agency said significant uncertainty surrounds the near-term U.S. defense budget, which could result in lower earnings if funding for the company's programs is reduced or eliminated.

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