Businesses on the block include Pratt & Whitney Rocketdyne, Clipper Windpower and the Hamilton Sundstrand industrial units, the company said. While the sales won’t be completed until after the Goodrich deal closes mid-year, final bids for Rocketdyne are due in coming weeks, Chief Financial Officer Greg Hayes said.
“We’re getting a very good asset in Goodrich, and we’re giving up a smaller, very good asset in these businesses,” Hayes said today at a meeting with investors in New York. “We feel a lot better about the deal today than we did back in September, and we felt pretty good about it back in September.”
United Technologies originally planned to issue as much as $4 billion in new equity to pay for Goodrich, which adds the world’s largest maker of aircraft landing gear to brands that include Pratt & Whitney jet engines and Sikorsky helicopters, along with industrial products such as Otis elevators and Carrier air conditioners.
Moody’s Investors Service cut its outlook on United Technologies’ A2 debt rating to negative on Feb. 28, saying an increased reliance on debt and asset sales “entails more execution risk.” Standard & Poor’s reduced the outlook on its equivalent grade of A to negative in September.
United Technologies also plans to sell $6 billion to $7 billion of long-term debt and $2 billion to $3 billion of short- term debt to finance the deal. Chief Executive Officer Louis Chenevert plans to raise $1.5 billion from a sale of mandatory convertible instruments, and spend about $3 billion of cash.
“This plan should be sufficient to avert the equity issuance, and keep the company’s credit rating” if the divestitures proceed as planned, Robert Stallard, an analyst at RBC Capital Markets, said today in a note to clients. “This clarification is a positive for the stock.”
Profits in 2012 will be $5.30 to $5.50 a share including Goodrich, matching a December forecast, United Technologies said. That’s compared with a $5.40 to $5.60 estimate last month.
United Technologies climbed less than 0.1 percent to $86.89 at the New York close. The shares have gained 19 percent this year.
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