Bulletin: TE Connectivity Ltd.'s Announced Sale Of Its Subcom Business Will Be Largely Credit Neutral Despite Share Buybacks

NEW YORK (S&P Global Ratings) Sept. 18, 2018--S&P Global Ratings said today that Schaffhausen, Switzerland-based TE Connectivity Ltd.'s (A-/Stable/A-2) sale of its subsea communications business (subcom) to Cerberus Capital Management for $325 million will be largely credit neutral despite the company's intention to use the net proceeds to fund share repurchases. Management expects the transaction to close by Dec. 31, 2018 (first fiscal quarter 2019). TE Connectivity will lose about $730 million in annual revenues (or about 5% of revenues at June 30, 2018) that experience meaningful cyclicality due to its project-based operations. Subcom revenues have ranged from $280 million-$900 million annually over the past few years; the timing of projects and investment cycles from telecom and hyperscale cloud vendors

...NEW YORK (S&P Global Ratings) Sept. 18, 2018--S&P Global Ratings said today that Schaffhausen, Switzerland-based TE Connectivity Ltd.'s (A-/Stable/A-2) sale of its subsea communications business (subcom) to Cerberus Capital Management for $325 million will be largely credit neutral despite the company's intention to use the net proceeds to fund share repurchases. Management expects the transaction to close by Dec. 31, 2018 (first fiscal quarter 2019). TE Connectivity will lose about $730 million in annual revenues (or about 5% of revenues at June 30, 2018) that experience meaningful cyclicality due to its project-based operations. Subcom revenues have ranged from $280 million-$900 million annually over the past few years; the timing of projects and investment cycles from telecom and hyperscale cloud vendors can lead to meaningful revenue volatility. In the third quarter ended June 30, 2018, subcom revenues declined about -6% year over year on an organic basis, while other communications...

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