S&P puts Beechcraft on positive watch

Standard & Poor's said it placed Beechcraft Holdings LLC's B+ corporate credit rating on CreditWatch with positive implications.

The CreditWatch placement follows news that higher-rated Textron Inc. plans to buy Beechcraft for $1.4 billion, S&P said.

"We expect that all of Beechcraft's outstanding debt will be repaid as part of the transaction," said Christopher Denicolo, an S&P analyst.

The transaction is subject to the customary regulatory approvals and is expected to close by early 2014.

Beechcraft's business risk profile is considered weak based on its position as a well-established manufacturer of turboprops and piston aircraft, the business aviation market's cyclical and competitive nature, Beechcraft's limited end-market diversity and the uncertain long-term prospects for its military trainers and attack aircraft, Denicolo said in a press release.

Beechcraft's financial risk is considered aggressive based on the company's reduced leverage after emerging from bankruptcy earlier this year and its adequate liquidity, the analyst said.

The ratings also reflect the company's limited free cash flow in the next two years due to high capital expenditure and working capital requirements, Denicolo added.

The CreditWatch placement will be resolved after the transaction closes, the agency said.

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