Fitch Puts TransDigm On Watch After Acquisition

NEW YORK (AP) -- Fitch Ratings said Tuesday it is worried about higher debt levels at TransDigm Group Inc. following its announcement that it plans to buy McKechnie AeroSpace Holdings, placing the aircraft parts maker on watch for a possible downgrade.

Fitch's decision to place TransDigm's ratings on "Ratings Watch Negative" affects $1.8 billion of outstanding debt, the ratings agency said. That figure will rise to $3 billion at the close of the acquisition.

TransDigm on Monday said it will acquire McKechnie, a privately held aerospace company, for about $1.27 billion in cash from private-equity firm JLL Partners. It is financing the acquisition with senior and subordinated debt. The deal is expected to close by the end of the calendar year.

The ratings agency said the acquisition is a "good business fit" for TransDigm, but the higher debt levels resulting from the deal, as well as integration risks and the purchase price, raise concerns.

Fitch said it will complete its review of TransDigm's ratings once the deal closes and final details about the acquisition are released. If a downgrade occurs, it is likely affect the Cleveland company's issuer default rating by one notch, Fitch said.

Shares of TransDigm fell 22 cents to $61.46 in midday trading Tuesday.

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