Moody's may lower DRS Technologies

Moody's Investors Service said it placed the ratings of DRS Technologies, Inc. under review for possible downgrade following the announcement by the company of its proposed purchase of Engineered Support Systems, Inc. (ESSI, not rated) for total consideration of about $2 billion in cash and DRS stock.

The agency said the ratings review will focus on the impact of the proposed financing on the capital structure and credit statistics of the company post-acquisition.

Moody's noted the company's plan to substantially increase leverage to fund this acquisition, as the company announced plans to increase its borrowings by $1.3 billion through a combination of senior secured credit facilities as well as senior unsecured and subordinated notes offerings.

The review will also incorporate the expected benefits that DRS should derive from the acquisition of ESSI, weighed against potential risks associated with integration of new business units of a company of this size, Moody's said.

Affected ratings include the company's senior secured revolving credit facility due 2008 rated Ba3, senior secured term loans due 2010 rated Ba3, senior subordinated notes due 2013 rated B2 and corporate family rating of Ba3.

© 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.