UPDATE 4-Toshiba's Westinghouse files for bankruptcy as charges jump
* Westinghouse secures $800 mln in debtor-in-possession financing
Nov 29 - Fitch Ratings has revised the Rating Outlook on Kirby Corp. to Stable from Positive and affirmed the ratings at 'BBB'. The revision in Outlook follows Kirby's recently announced acquisition of Penn Maritime (Penn) for $295 million. The acquisition will be funded with debt through a $500 million private placement of senior unsecured notes with $300 million intended for the acquisition and $200 million to pre-fund the company's February 2013 note maturity. Additional debt from this transaction and the recent acquisition of Allied Transportation Co (Allied) could push Debt/EBITDA above 2.2x by year-end 2012. Fitch has also assigned a rating of 'BBB' to the new $150 million seven-year and $350 million 10-year senior unsecured notes. The notes feature 2.72% and 3.29% coupons, respectively, and rank equally in priority to the senior unsecured debt currently outstanding. A full rating list is shown at the end of this release. Kirby's Outlook was revised to Positive in March of 2012 under the rationale that the increased size of the company following the purchases of K-Sea Transportation and United Holdings put Kirby in a better position to absorb future acquisitions without materially increasing the risk profile of the company. While this remains true, the increase in leverage relating to the current round of acquisitions combined with other adverse industry conditions and increasing uncertainty in the general economy make it less likely that the company will merit an upgrade in the near term. The Outlook also reflects concerns that future growth in this industry will likely continue to be acquisition driven. Upwards rating movement will be limited if future acquisitions keep leverage above historical levels. The Penn acquisition should ultimately be viewed favorably despite the temporary increase in leverage, due to its complementary nature to Kirby's existing coastwise business. This will be particularly true as the remaining single-hull barges in operation are retired in the coming years and utilization trends upward. Penn Maritime is a leading coastwise barge operator with a fleet of 18 double-hulled barges in the 80-120 thousand barrel range and 16 tugs. The fleet is relatively young, with most barges being built within the past 10 years. Penn primarily hauls black oil products including liquid asphalt, fuel oil, and feed stock. This complements Kirby's other recent coastwise acquisitions which mainly deal in refined petroleum products (K-Sea, purchased in July 2011) and chemicals (Allied, purchased in November 2012). The addition of black oil product capacity in the coastwise market helps Kirby to replicate its successful inland business in the coastwise market by offering a full array of liquid hauling services. Kirby also recently completed the acquisition of Allied, a smaller coastwise operator dealing in petrochemicals and bulk sugar. The purchase price was $116 million, $10 million of which is to be paid contingent upon developments in sugar provisions in the U.S. farm bill. The Allied acquisition was funded through Kirby's revolver. In addition to higher leverage, there are several operating factors causing weaker than expected results which contribute to the revised Outlook. Recent headwinds have included higher than expected integration and maintenance costs related to the 2011 acquisition of K-Sea, a larger than anticipated slow-down in the diesel engine services business related to reduced fracking activity, and adverse conditions caused by low water on the Mississippi river system. Kirby's land-based diesel engine services business (formerly United Holdings) is struggling from a sharp downturn in orders for new hydraulic fracturing equipment. Persistently low natural gas prices experienced through the year have caused new drilling activity in North American shale gas formations to fall off more quickly than anticipated. Kirby's expectation for this business is a transition to a primarily service and overhaul-based model, deemphasizing the manufacture of new equipment. However, adverse conditions have forced the company to make this transition sooner than expected, causing near-term headwinds. Total third quarter revenues for the diesel engine services segment (including offshore) were down by 19% vs. the same period in 2011. The integration of K-sea has also been costlier than originally estimated. Maintenance costs related to K-Sea's fleet have been higher than anticipated, putting pressure on cash flow expectations for the year. Fitch ultimately expects that the addition of K-Sea will be positive, expanding the breadth of Kirby's market. However, additional costs in the near term make it more likely that meaningful leverage reduction will take longer than initially anticipated. Kirby's legacy inland marine business continues to perform well. Barge utilization rates on the inland waterways remain high, and the pricing environment has proven resilient throughout the first part of the year with revenue per ton mile continuing to increase from recession levels. The positive operating environment is somewhat offset by low water conditions on the Mississippi river system caused by this summer's drought. Low water forced Kirby to light-load many of its barges throughout the summer months, persisting through the third quarter, leading to a notable drop in total ton miles. Kirby reports that water conditions cost the company roughly $0.5 million per month in reduced cargo. Increased capital spending and lower than expected revenues will pressure free cash flow (FCF) in the near term. Fitch expects FCF for full-year 2012 to fall below the $86 million generated in 2011. Free cash should see significant improvement in 2013 and beyond as capital spending turns sharply lower, with Kirby completing much of its planned fleet renewal in 2012. Meaningful FCF generation in the coming years should allow Kirby to de-lever from the current round of acquisitions. Kirby's financial flexibility remains adequate. The company had a cash balance of $5.1 million and revolver availability of $229 million ($325 million less $92 million outstanding and $3.6 million in letters of credit) as of Sept. 30, 2012. Kirby utilized the accordion feature under its revolver to expand total capacity to $325 million from $250 million along with the Allied acquisition. Subsequent to quarter-end, revolver availability was reduced by roughly $106 million due to the Allied acquisition. However, Fitch expects Kirby to direct near-term FCF towards paying down the outstanding balance. Future debt maturities are manageable with the February 2013 maturity of Kirby's $200 million notes being pre-funded by the planned issuance. There are no other major maturities until Kirby's term loan expires in 2015. What could trigger a rating action: Positive: Future developments that may, individually or collectively, lead to a positive rating action include: --Leverage being reduced and maintained below 1.5x; --An effective integration of the recent acquisitions; --Improved free cash flow. Negative: Future developments that may, individually or collectively, lead to a negative rating action include: --Additional debt funded acquisitions; --A shift in cash distribution priorities away from deleveraging the balance sheet. Fitch has affirmed Kirby Corporation's ratings as follows: Kirby Corporation: --Issuer Default Rating at 'BBB'; --Senior Unsecured Credit Facility at'BBB'; --Senior Unsecured debt at 'BBB'. Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. Applicable Criteria and Related Research: --'Corporate Rating Methodology', Aug. 8, 2012. Applicable Criteria and Related Research: Corporate Rating Methodology
* Westinghouse secures $800 mln in debtor-in-possession financing
LAUSANNE, March 29 Top executives from the world's largest commodity trading houses discuss trends in trading at the FT Commodities Global Summit in Lausanne, Switzerland, this week.