Moody's Warns On GE Rating As Slumping Giant Faces Investors
Umer Jamshaid Published April 26, 2018 | 02:10 AM
New York, (APP - UrduPoint / Pakistan Point News - 26th Apr, 2018 ) :Moody's placed a negative outlook on General Electric's debt rating Wednesday due to increased legal costs even as executives pledged to turn the company around at a bruising annual shareholder meeting.
The ratings agency cited GE's announcement Friday that it was putting aside $1.5 billion in reserves to cover legal settlements connected to a subprime lending business it exited. The reserves put additional burdens on GE Capital, where the subprime unit had been managed.
While GE has high debt, Moody's said the company's finances were solid overall, and affirmed the ratings for GE and GE Capital, but both received a negative outlook. The parent company's support of GE Capital, including debt guarantees, meant the "equalization" of the ratings on the two units, Moody's said.
GE was the biggest loser in the Dow, falling 4.5 percent. But Moody's said that given the solid business outlook for GE, "cash flows will show steady improvements as restructuring and portfolio shaping initiatives start to yield gains." - Irate shareholders - Moody's statement came as GE executives got an earful from shareholders following a year in which the company slashed its dividend and saw its share price nosedive.
Chief executive John Flannery acknowledged that 2017 was "immensely disappointing" and pledged to turn the company around. "We're keenly aware of the pain our performance has caused," Flannery said.
"Our focus in 2018 is to earn back your trust." Flannery has trimmed costs, streamlined its board, revamped employee compensation and announced plans for some $20 billion in assets sale. The shareholder meeting was dominated by retired employees angered by cutbacks to health benefits and at the company's broader slump.
Several praised Flannery, but some criticized prior management and remaining board members who presided amid the company's slide over the last year. Flannery was gracious, but took issue with one particularly irate speaker who said GE was "an embarrassment," saying politely that he was still "extremely proud" of the company and confident it would have more triumphs ahead.
The most closely-watched issue up for a vote by shareholders was GE's decision to maintain auditor KPMG, but nearly two-thirds supported the company's stance.
Recent Stories
HEC reviews curricula for environmental sciences degree programme
ICC Asia looking forward to an action-packed Asia Cricket Week
Yuvraj Singh named ICC Men’s T20 World Cup 2024 Ambassador
Greece hands Olympic flame to 2024 Paris Games hosts
Two Kyiv hospitals evacuating over feared Russian strikes
World must act on neurotech revolution, say experts
Charles & Catherine's cancer diagnoses
Champions Alcaraz and Sabalenka through in Madrid Open
King Charles to resume some public duties during cancer treatment: palace
US defense chief announces $6 bn in security aid for Ukraine
Heavy rains cause damage to Spezand-Taftan railway track
Woman stabbed in Israel, attacker killed: police
More Stories From World
-
NFL will allow players to wear Guardian Cap helmets in games
7 hours ago -
Football: German Bundesliga table
7 hours ago -
Football: Italian Serie A result
7 hours ago -
Football: German Bundesliga results
7 hours ago -
US troops to leave Chad in second African state withdrawal
7 hours ago -
Plastics pollution may be solved without production cap: Canada minister
7 hours ago
-
Biden stalls on menthol cigarette ban fearing Black vote backlash
7 hours ago -
Champions Alcaraz and Sabalenka through in Madrid Open
7 hours ago -
6,000 French police to welcome Olympic torch amid bonus boost
7 hours ago -
Taiwan hit by several quakes, strongest reaching 6.1-magnitude
8 hours ago -
'Ballistic' Bairstow stars as Punjab pull off record T20 chase
8 hours ago -
Tennis: ATP/WTA Madrid Open results - 2nd update
8 hours ago