Moody's downgrades Westinghouse debt to 'junk'

January 08, 1994|By Bloomberg Business News

NEW YORK -- Moody's Investors Service cut its debt ratings yesterday for Westinghouse Electric Corp., pushing $4 billion of debt into "junk bond" status.

In cutting the ratings on Westinghouse's long- and short-term debt, Moody's cited the Pittsburgh-based company's weak earnings and eroding equity base. The ratings changes complete a review begun in October.

The downgrades mean Westinghouse will be "paying more for the debt and have fewer buyers to solicit purchases from," said Greg Drahuschak, an analyst at Janney Montgomery Scott.

Moody's said it based the downgrades on its expectation that Westinghouse's efforts to rebuild its depleted capital structure will take longer than previously believed.

The debt rating agency cited "persistent weakness in operating earnings and operating cash flow" at Westinghouse and blamed the company's continuing problems on "weak global demand affecting certain continuing businesses."

Westinghouse stock closed down 25 cents, at $13.625, on volume of 1.16 million shares, surpassing the three-month average daily volume of 911,281 shares.

"We don't believe Moody's action will materially impact our operations or financial condition or our ability to borrow in the capital markets," said Westinghouse Chairman and Chief Executive Michael H. Jordan, who was hired in June and has been reviewing ways to revive the company ever since.

Moody's downgraded ratings on Westinghouse senior notes and debentures to "Ba1" from "Baa3" and medium-term notes to "Ba1" from "Baa3." In ratings changes affecting Westinghouse Credit Corp., Moody's downgraded debentures, Eurobonds, floating-rate notes, medium-term notes, and senior notes to "Ba1" from "Baa3."

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