S&P keeps Foster Wheeler on negative watch

Standard & Poor's is keeping the B+ corporate credit rating for Foster Wheeler Ltd. on watch with negative implications, after the company recorded an added $46 million charge in the fourth quarter. Foster Wheeler said it will revise its 2002 forecast downward but its cash position at March 29 rose to $423 million from $224 million at yearend.

Foster Wheeler's independent auditor has given the firm a qualified audit opinion on 2001 financial statements, including "going concern" language, due to Foster Wheeler's continued negotiations to finalize a long-term amendment or waiver to its bank revolving credit facility, a lease and account receivable beyond April 30.

Should the company be unable to obtain waivers or long-term amended agreements beyond April 30, it is possible that creditors could accelerate payments, which could potentially lead to a default, S&P said.

However, should senior bank lenders pursue that strategy, their position in a default scenario would be pari passu to senior unsecured noteholders and other senior obligors.

As a result, S&P believes senior bank lenders have a meaningful economic interest to strengthen their position in the debt structure rather than pursue a debt acceleration scenario.

Foster Wheeler's auditors also noted the company's receivable sale lenders have decided to terminate the agreement. However, the company has publicly stated that it is in negotiations with other financial institutions to replace this program.

S&P: No ratings effect by International Rectifier acquisition

Standard & Poor's said the ratings and outlook for International Rectifier Inc. (BB-/Stable/--) will not be impacted by its $50 million acquisition of TechnoFusion GmbH from Koninklijke Philips Electronics NV.

TechnoFusion has annual revenues around $50 million. TechnoFusion provides power regulation semiconductor modules for the automotive industry and is seen as supplementing International Rectifier's expertise in this market.

S&P said the purchase price is well within the resources of International Rectifier, which had $834 million cash at Dec. 31.

S&P says Northrop's upped bid for TRW has no affect on ratings

Standard & Poor's said Northrop Grumman Corp.'s (BBB-/Stable/--) enhanced all-equity bid for TRW Inc. (BBB/Watch Neg/A-2) does not result in any change to its ratings or outlook for Northrop Grumman.

Northrop Grumman has followed up on its February unsolicited bid to acquire TRW by increasing the exchange value to $53 per share from $47. The revised value of the transaction would be about $11.7 billion, including $5 billion of TRW debt to be assumed.

Ratings take into account the strong business profile of the combined defense operations of Northrop Grumman and TRW and expected preservation of adequate financial flexibility at the combined entities, S&P said.

In addition, Northrop Grumman should be able to realize appropriate value for TRW's very large ($10 billion revenues out of $16 billion total) automotive operations, which would be separated at the close of the transaction.

Automotive operations face very challenging markets at this time. If the acquisition closed in 2002, the combined Northrop Grumman and TRW defense and aerospace businesses would generate over $26 billion revenues in 2003.

Northrop Grumman's debt to total capital would not rise above the mid-40% level, adjusted for operating leases, attained at year end 2001.

S&P rates QBE convertibles A+

Standard & Poor's assigned an A+ rating to QBE Funding Trust's offering of $250 million LYONs due 2022 guaranteed by QBE Reinsurance (Europe) Ltd.

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