TEXT-S&P may cut Oshkosh 'BB' corporate credit rating

Fri Oct 12, 2012 1:53pm EDT

Overview
     -- Carl Icahn has offered to buy all the outstanding shares of specialty 
vehicle manufacturer Oshkosh Corp. for $32.50 per share.
     -- We are placing our ratings on Oshkosh, including the 'BB' corporate 
credit rating, on CreditWatch with negative implications.
     -- We will resolve the CreditWatch listing when more information 
regarding the proposed transaction becomes available. We will then assess 
Oshkosh's financial policy and the impact of any potential transaction on its 
capital structure.

Rating Action
On Oct. 12, 2012, Standard & Poor's Ratings Services placed its ratings on 
Oshkosh, Wis.-based Oshkosh Corp., including the 'BB' corporate credit rating, 
on CreditWatch with negative implications. 

Rationale
The CreditWatch placement reflects uncertainty regarding the leverage profile 
for Oshkosh and its strategic direction following reports that the company has 
received a buyout offer from Carl Icahn for $32.50 per share, valuing the 
company at close to $4 billion including debt. 

As we had previously noted, Carl Icahn and related entities had disclosed 
beneficial ownership of about 9.5% of Oshkosh stock in July 2011, through a 
combination of shares and call options. Although unsuccessful in electing any 
of his six nominees in January 2012 following a proxy fight, the Icahn-led 
ownership and potentially heightened shareholder focus caused some uncertainty 
as to the strategic direction of the company and had the potential to result 
in a more aggressive financial policy. 

Yesterday's announced tender offer for Oshkosh's shares has increased risks 
related to our assessment of the company's financial risk profile, which we 
currently assess as "significant" because of uncertainty as to how the 
proposed transaction will be financed and the potentially more aggressive 
policy an Icahn-owned entity could pursue.

Further, possible strategic actions could result in a change in our assessment 
of the company's business risk profile, which we currently view as 
"satisfactory." For instance, Icahn has recently indicated a desire to have 
Oshkosh spin off its aerial work platform segment, which represents a 
significant portion of revenues and profits. We expect the unit to represent 
more than half of operating profit in fiscal 2013.

CreditWatch
We will resolve the CreditWatch listing when more information regarding the 
proposed transaction becomes available. We will then assess the company's 
financial policy and the impact of any potential transaction on the company's 
capital structure or operating strategy.

Related Criteria And Research
     -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011
     -- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, 
May 27, 2009
     -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

Ratings List
Ratings Placed On CreditWatch Negative
                                        To                 From
Oshkosh Corp.
 Corporate Credit Rating                BB/Watch Neg/--    BB/Stable/--
 Senior Secured                         BBB-/Watch Neg     BBB-
   Recovery Rating                      1                  1
 Senior Unsecured                       BB/Watch Neg       BB
   Recovery Rating                      4                  4
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