Fitch Removes DRS Technologies from Rating Watch Positive; Upgrades IDR to 'BBB'

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has removed DRS Technologies, Inc.'s (NYSE:DRS) ratings from Rating Watch Positive and taken various rating actions as detailed below. The actions follow the completion of Finmeccanica SpA's (Finmeccanica, rated 'BBB/F2' with a Positive Rating Outlook by Fitch) acquisition of DRS and the subsequent announcement by Finmeccanica that it would guarantee certain DRS bonds. DRS' ratings were initially placed on Rating Watch Positive on May 13, 2008.

Fitch has upgraded the following ratings:

--Issuer Default Rating (IDR) to 'BBB' from 'B+';

--Senior unsecured notes to 'BBB' from 'BB+/RR1';

--Senior unsecured convertible notes to 'BBB' from 'BB+/RR1';

--Senior subordinated notes to 'BBB-' from 'B/RR5'.

Fitch has withdrawn the following ratings:

--Senior secured revolving credit facility 'BB+/RR1';

--Senior secured term loan 'BB+/RR1'.

Fitch has withdrawn the Recovery Ratings (RR) on all debt in the capital structure based on the upgrade of the IDR and in accordance with Fitch's recovery ratings methodology.

The senior unsecured convertible notes are currently convertible, and Fitch intends to withdraw the related ratings when the conversion is completed.

The Rating Outlook is Positive.

The upgrade of the senior unsecured notes is driven by the approval of Finmeccanica's board of directors to extend a guarantee in favor of these notes, which will now have the same rating as Finmeccanica's senior unsecured debt. The upgrade of the senior subordinated notes is also driven by the extension of a guarantee, but the notes are notched down to 'BBB-' due to the notes' subordinated position.

Fitch affirmed Finmeccanica's ratings ('BBB/F2'; Positive Rating Outlook) after the announcement of the DRS transaction. While the initial effect on Finmeccanica's key credit metrics like leverage and cash flow ratios will be slightly negative, the company is expected to maintain a profile that is strong for the 'BBB' category in the medium to long term.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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. The issuer did not participate in the rating process other than through the medium of its public disclosure.