Textron Inc. (TXT)

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Fitch downgrades Textron debt ratings
Fitch downgrades debt ratings, saying Textron faces liquidity pressures in 2010
Tuesday February 10, 2009, 1:45 pm EST
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CHICAGO (AP) -- Fitch Ratings has downgraded debt ratings for Textron Inc., citing possible liquidity problems next year as the maker of Cessna jets, Bell helicopters and E-Z-GO golf carts seeks to exit its finance business.

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The ratings agency downgraded the Issuer Default Ratings and long-term debt ratings to "BBB-" from "BBB" for the Providence, R.I.-based company and its finance business, Textron Financial Corp.

In addition, the short-term Issuer Default Ratings and commercial paper ratings have been downgraded to "F3" from "F2". The Rating Outlook is "Negative."

Fitch also has downgraded and withdrawn its ratings for Textron's preferred securities due to what it said is a small amount outstanding. Debt and preferred securities totaled nearly $11 billion as of Jan. 3, including $2.5 billion at Textron and $8.3 billion at Textron Financial Corp., the ratings agency said.

A message seeking comment was left with a spokeswoman for Textron.

The downgrades recognize risks related to Textron Financial Corp.'s plans to exit its finance business and the weak economy that could pressure its asset quality and financial performance at Textron's manufacturing businesses, Fitch said.

"These factors could lead to liquidity pressures in 2010 in the absence of asset sales or capital market transactions," it said.

Other developments considered in the ratings include a "full drawdown" of the company's bank facilities and recently announced management changes, which Fitch said emphasize the "broad challenges" facing the company.

The company on Monday announced the departures of Ted French, executive vice president and chief financial officer, and Buell "Jay" Carter, president and chief operating officer of Textron Financial.

Some on Wall Street have been calling for a change in senior management, especially at Textron Financial Corp. The business that provides financing for new and used Cessna business jets, golf courses, as well as to developers of vacation resorts continues to deteriorate.

Last week, Textron drew $3 billion in credit to pay off debt and pump liquidity as it exits nearly all of its commercial financial business. After repaying all commercial paper, or short-term debt, valued at $1.8 billion, Textron said it will use the remaining $1.2 billion for additional liquidity.

Fitch said that despite higher cash balances as a result of Textron Financial Corp.'s drawdown, liquidity "continues to represent a key rating concern."

Shares fell 99 cents, or 13.51 percent, to $6.34 in afternoon trading.