S&P: GKN view to negative

Standard & Poor’s said it revised the outlook on GKN Holdings plc to negative from stable.

The agency also said it affirmed the company’s long-term corporate credit and senior unsecured debt ratings at BBB-.

The outlook revision reflects a view that, following news that the company partly debt-financed the acquisition of Fokker Technologies group, there is a one-in-three possibility that GKN’s leverage measures will not improve over the next 18 months to levels considered commensurate with the current rating, S&P said.

This would include adjusted funds from operations-to-debt of more than 30% and debt-to-EBITDA of less than 3x, the agency said.

The acquisition cost about £353 million in cash with an additional £96 million of third-party net debt repayments. It will be financed with about £200 million of equity, S&P said.

GKN has a track record of successfully integrating its acquisitions, more recently Volvo Aero, the agency said.

Fokker is expected to be integrated successfully over the next two years, S&P said.

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