MOODY'S PLACES BENEFICIAL CORPORATION'S LONG TERM DEBT RATINGS (SENIOR AT A2) UNDER REVIEW WITH DIRECTION UNCERTAIN; COMMERCIAL PAPER RATING (P-1) PLACED ON REVIEW FOR POSSIBLE DOWNGRADE
New York, 02-17-98 -- Moody's Investors Service placed the long term debt ratings (senior at A2) of Beneficial Corporation under review with direction uncertain following the company's announcement that it is reviewing its strategic alternatives, which include among other things, a merger, strategic alliance, or sale of the firm. Beneficial's commercial paper rating (P-1) has been placed on review for possible downgrade. This decision reflects the uncertainty surrounding the outcome of the company's strategic review. However, Moody's noted that should the company pursue a sale or merger, it could be with an equal or higher rated entity.
Moody's said that the review will focus on the implications of the outcome of the strategic review on Beneficial's franchise, financial and operating fundamentals, and future ownership structure. The rating agency noted that the various strategic alternatives under consideration may have different consequences for Beneficial's short and long term ratings. Moody's added that the company is in the midst of a restructuring and reorganization plan announced in October 1997. This plan involves the sale of the company's Canadian and German consumer finance subsidiaries, the divestiture of certain real estate in New Jersey and Florida, and the repurchase of up to 3 million shares of common stock.
The following ratings are under review:
Beneficial Corporation -- the A2 rating for senior debt, the Prime-1 commercial paper rating, and the A2 counterparty rating;
Beneficial Bank plc -- the A2 rating for senior debt, and the Prime-1 rating for commercial paper;
Beneficial Canada, Inc. -- the A2 rating for senior debt, and the Prime-1 rating for commercial paper.
Beneficial Corporation and its various subsidiaries have operations in consumer finance, credit card, banking, and credit insurance throughout the United States, United Kingdom, Ireland, Canada, and Germany. As of December 31, 1997, the company had $17.6 billion in assets.
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