Fitch Places Whirlpool's Ratings on Watch Negative

  Fitch Places Whirlpool's Ratings on Watch Negative

Business Wire

CHICAGO -- July 14, 2014

Fitch Ratings has placed Whirlpool Corporation's (NYSE: WHR) ratings on Rating
Watch Negative following the company's announcement that it has entered into
binding agreements to acquire a majority interest in Indesit Company S.p.A.
(Indesit) for approximately $1.038 billion. The acquisition of the controlling
interest in Indesit is subject to judicial and antitrust approvals and is
expected to close by the end of 2014.

ACQUISITION AGREEMENT

Whirlpool has entered into the following binding agreements:

--Share repurchase agreement to acquire Fineldo S.p.A.'s stake in Indesit,
representing about 42.7% ownership;

--Share repurchase agreement with certain members of the Merloni family for a
13.2% stake in Indesit;

--Share repurchase agreement with Ms. Claudia Merloni for a 4.4% stake in
Indesit.

The total 60.4% of Indesit stock represented under the three agreements
represent a 66.8% voting stock in the company (including the treasury shares
held by Indesit).

Closings under the Fineldo and Merloni family agreements are subject to
judicial and antitrust approvals. The closing of the agreement to acquire Ms.
Claudia Merloni's 4.4% stake in Indesit is not subject to antitrust and court
authorization conditions and is expected to take place within the next few
business days.

Following the close of the acquisition of the Fineldo and Merloni family
members' stakes, Whirlpool will launch a mandatory tender offer on all
remaining shares of Indesit.

INDESIT ACQUISITION AND RATIONALE

Founded in 1975, Indesit is one of the leading European manufacturers and
distributors of major appliances. Indesit has eight industrial sites (in
Italy, Poland, the United Kingdom, Russia and Turkey) and approximately 16,000
employees.

During fiscal 2013, Indesit had sales of EUR2.67 billion and EBITDA of
approximately EUR178.5 million. The company generated about 56% of revenues
from Western Europe, 38% from Eastern Europe and 6% from non-European markets.

The proposed acquisition has good strategic rationale for Whirlpool. Indesit
provides Whirlpool with a broader platform to expand its operations in Europe.
Currently, about 16% of Whirlpool's revenues are generated from this region.
On a pro forma basis (including Indesit), sales from Europe, Middle East and
Africa will represent about 29% of Whirlpool's worldwide sales.

Appliance demand in Europe remains relatively weak. Whirlpool's sales in the
EMEA region grew 8% during the first quarter of 2014 (1Q'14) compared with
1Q'13 but the 1Q'14 sales are still 13% below the 1Q'07 sales level. Indesit's
revenues for the 1Q'14 were 6.6% lower compared with 1Q'13 sales, due to lower
volumes and the negative effect of foreign currency translation. Fitch
currently expects appliance sales in Europe will be flat to slightly higher in
2014 compared with 2013.

IMPACT ON RATINGS

While Fitch views the transaction as strategically positive for Whirlpool,
negative rating actions are likely given the projected increase in leverage
from higher debt levels (debt to be assumed and the debt incurred to finance
the acquisition). In June 2014, Fitch affirmed Whirlpool's Issuer Default
Rating (IDR) at 'BBB' and revised the Outlook to Positive from Stable with the
expectation that the company's credit metrics continued to improve, including
debt to EBITDA situating in the 1x-1.5x and interest coverage consistently
above 10x. An upgrade of Whirlpool's ratings is now unlikely.

Fitch now estimates that the company's debt to EBITDA could be in excess of
2.0x and funds from operations (FFO) adjusted leverage could be 3.5x or higher
by year-end 2015, depending on the amount of the acquisition price that will
be funded by debt.

Whirlpool's IDR could be downgraded one-notch to 'BBB-'. Conversely, the
company's ratings could also be affirmed at the current level should
Whirlpool's credit metrics stay within the parameters of the 'BBB' rating
level, including debt to EBITDA sustained in the 1.5x-2.0x range and interest
coverage between 6.0x-10.0x.

Fitch will meet with management in the next month to review the transaction,
including management's strategy to integrate the operations and Whirlpool's
capital structure following the completion of the acquisition. Fitch expects
to resolve the Rating Watch Negative upon the closing of the transaction and
review of Whirlpool's financial and credit profile.

Fitch has placed the following ratings on Watch Negative:

Whirlpool Corporation

--Long-term IDR at 'BBB';

--Short-term IDR at 'F2';

--Commercial paper at 'F2';

--Senior unsecured notes at 'BBB';

--Bank revolving credit facility at 'BBB' (Whirlpool Corp., Whirlpool Europe
B.V., Whirlpool Finance B.V. and Whirlpool Canada Holding Company as
borrowers).

Maytag Corporation

--Long-term IDR at 'BBB';

--Senior unsecured notes at 'BBB'.

Whirlpool Finance B.V.

--Short-term IDR at 'F2';

--Commercial paper (CP) at 'F2'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (May 28, 2014).

Applicable Criteria and Related Research:

Corporate Rating Methodology - Including Short-Term Ratings and Parent and
Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749393

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=839279

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS
OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH WEBSITE.

Contact:

Fitch Ratings
Primary Analyst
Robert Rulla, CPA
Director
+1-312-606-2311
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Robert Curran
Managing Director
+1-212-908-0515
or
Committee Chairperson
Sean Sexton
Managing Director
+1-312-368-3130
or
Media Relations:
Brian Bertsch, New York, +1 212-908-0549
Email: brian.bertsch@fitchratings.com
 
Press spacebar to pause and continue. Press esc to stop.