Moody's maintains downgrade review on Panasonic

Thu. November 05, 2009; Posted: 09:04 AM

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.

Comments on this story may be sent to admin@m2.com

For full details on Panasonic Corporation (PC) click here. Panasonic Corporation (PC) has Short Term PowerRatings of 6. Details on Panasonic Corporation (PC) Short Term PowerRatings is available at This Link.

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