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Moody's maintains downgrade review on Panasonic

Posted on: Thu, 05 Nov 2009 09:04:00 EST

Symbols: PC

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Nov 05, 2009 (M2 EQUITYBITES via COMTEX) --
PC | Quote | Chart | News | PowerRating -- 5 November 2009 AcaeaEURoe Moody's has kept Panasonic Corp (TYO:6752) on
downgrade review to reflect the news of the start of its public tender
offer (TOB) aimed at acquiring a controlling interest in Sanyo Electric
Co Ltd (TYO:6764).

The company said it would launch the TOB today. Its successful
completion would make the rival consumer electronics firm a subsidiary
of Panasonic.

The agency is examining for downgrade Panasonic's Aa2 long-term debt
ratings and issuer rating. It will end the review upon completion of
the TOB. The review will mostly take into account Panasonic's
post-acquisition business and financial strategies, Moody's said.

Moody's added it expects the deal to help boost Panasonic's battery
operations considerably, given the segment's strong growth potential.
"Panasonic and Sanyo hold the world's leading market positions in
rechargeable batteries, including HEV (Hybrid Electric Vehicle)
batteries, and Sanyo's solar cell has the highest level of energy
conversion efficiency in the world," the agency said.

However, the acquisition, which requires over JPY400bn
(USD4.4bn/EUR3bn) in cash, may have a significant impact on Panasonic's
financial position. Besides, Sanyo had incurred debt north of JPY500bn
as of September 2009. Therefore, the takeover could result in a
downward rating action.

A multiple-notch downgrade is possible depending on Moody's assessment
of how much time the company will need to improve its balance sheet or
to get a sufficient return on its investment, the agency concluded.

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