Eaton (ETN)

Add a New Bears Reason Company: Eaton (ETN) Current price: Headline: (100 character max) Analysis: Cancel 0% agree 14 votes   Negative credit watch by Fitch; what will potential recapitalization do to share price? Created when NYSE:ETN was $80.03 | Edit | History Eaton has financed the $2.8B acquisitions of Moeller & PhoenixTec with a $3B floating rate credit line that expires January 2009. The day after the acquisition announcement in December 2008, Fitch placed ETN on negative credit watch. Management on the April 14, 2008 1Q earnings call admitted they are still figuring out best way to recapitalize to bring the balance sheet back into target capital structure of 35% debt. It appears doing so will result in a minimum dilution of at least 20% under most optimistic assumptions. Eaton appears to face a conundrum: high debt in a tight credit market vs dilution in a volatile equity market. (100 character max) Cancel

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