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Fitch may upgrade Dana
Fitch Ratings said it placed Dana Corp.'s BB rating for senior unsecured debt on Rating Watch positive.
Dana has recently entered into a definitive agreement to sell its Automotive Aftermarkets Group with The Cypress Group for $1.1 billion in cash. Moreover, the announced transaction has received antitrust clearance from the U.S. Federal Trade Commission and Department of Justice, making third-quarter closing of the transaction a very high likelihood.
The transaction was valued higher than the $750 million to a $1.0 billion range that Fitch had earlier expected and comparably better than many transactions seen in the automotive parts industry. Dana has stated that it intends to use the proceeds from the transaction to grow the business, make voluntary pensions contributions (around $200 million), and improve the financial leverage of the company's capital structure.
Depending on the effective amount of the financial de-levering, in conjunction with an operating review, the rating could move up to two notches, the agency said.
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