S&P Places USG Corp. (USG) Ratings on CreditWatch Positive
- Donald Trump Sworn in as 45th U.S. President
- Wall Street ends higher as Trump becomes president
- Walgreens Boots Alliance (WBA) Said to Face Antitrust Concern for Rite Aid (RAD) Fix - Bloomberg
- Bristol-Myers Squibb (BMY) Says It Won't Pursue Accelerated U.S. Regulatory Pathway for Opdivo Plus Yervoy in Lung Cancer
- Apple (AAPL) Sues Qualcomm (QCOM) Over Patent Royalties in Antitrust Case - Bloomberg
Get the Pulse of the Market with StreetInsider.com's Pulse Picks. Get your Free Trial here.
S&P Global Ratings said it placed its ratings, including the 'BB' corporate credit rating, on USG Corp. (NYSE: USG) on CreditWatch with positive implications.
The CreditWatch listing follows USG's announcement that it has entered into a definitive agreement to sell its building product distribution subsidiary, L&W Supply Corp., to building materials distributor ABC Supply Inc. for total cash consideration of $670 million. The company expects to complete the transaction before the end of 2016. After divestiture, USG will operate through three main business segments: Gypsum, Ceilings, and its gypsum wallboard joint venture USG Boral Building Products.
We expect USG will use proceeds from the sale to retire debt, including its 2020 senior notes and 2021 senior notes, which they plan to call in December 2016. In addition, the company plans to organically retire the remaining $308 million of senior notes due in November 2016, mainly using cash on the balance sheet.
The company's revenues for the rolling twelve months through June 30, 2016, totaled approximately $3.9 billion. L&W Supply has been USG's lowest-producing EBITDA segment and has generated annual EBITDA of approximately $50 million. With USG planning to reduce debt by $900 million by the end of 2016, debt leverage is likely to improve from 3x as of the second quarter of 2016 to about 2x by the end of fiscal 2016.
"We will discuss with USG management its strategic and financial policy plans, including potential returns to shareholders, after the divestiture of L&W Supply Corp.," said S&P Global Ratings credit analyst Kimberly Garen. "We will resolve the CreditWatch listing upon the closing of the sale of L&W, which is subject to customary closing conditions, including regulatory approvals. Assuming the transaction closes as planned and the expected debt reduction takes place, we may either raise or affirm its ratings on USG."
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Eli Lilly (LLY) to Acquire CoLucid Pharmaceuticals (CLCD) for $960M
- UniPixel (UNXL) Reports MOU for Strategic Partnership with General Interface Solution
- M&T Bank (MTB) PT Raised to $165 at FBR Capital Following 4Q Beat
Create E-mail Alert Related CategoriesCredit Ratings
Related EntitiesStandard & Poor's
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!