Fitch Withdraws Con-way's Ratings Following Acquisition by XPO Logistics

NEW YORK--()--Fitch Ratings has withdrawn its ratings on Con-way Inc. (CNW) following the closing of its acquisition by XPO Logistics, Inc. (XPO) today. A summary of CNW's ratings that Fitch has withdrawn is at the end of this release.

Now that the acquisition has closed, CNW is a wholly owned subsidiary of XPO. XPO has financed the approximately $3 billion acquisition (including CNW net debt) with a combination of cash on-hand and incremental bank debt. Following the acquisition, Fitch believes CNW's ratings should reflect the credit profile of the merged company. However, Fitch does not rate XPO, and Fitch does not have sufficient information to continue rating CNW on a standalone basis. However, based on a high-level analysis, Fitch believes XPO's post-acquisition consolidated credit profile would be generally consistent with an Issuer Default Rating (IDR) in the 'B' category.

Based on a change of control provision in CNW's credit agreement, the credit agreement has been terminated as part of the acquisition closing. There is also a change of control provision in the indenture for CNW's 7.25% senior unsecured notes due 2018, and Fitch expects CNW will be required to offer to repurchase the 7.25% notes at 101% of their par value. The indenture for CNW's 6.7% senior unsecured notes due 2034 does not contain a change of control provision, and those notes may remain outstanding. As of June 30, 2015, CNW had a total of $425 million in principal amount outstanding on the 7.25% notes and $300 million in principal outstanding on the 6.7% notes. Going forward, Fitch does not expect CNW to be a significant issuer in the public capital markets.

Fitch expects certain U.S. assets of CNW, primarily facilities and rolling stock, will serve as collateral for XPO's secured bank financing. Fitch also expects CNW will provide an upstream guarantee for a portion of XPO's debt. However, Fitch does not expect XPO to provide a downstream guarantee on CNW's debt. This will essentially make any remaining CNW senior unsecured debt subordinate to any senior unsecured debt at XPO.

The following ratings of CNW were on Rating Watch Negative and have been withdrawn:

--Long-term IDR 'BBB-';

--Unsecured revolving credit facility 'BBB-';

--Senior unsecured notes 'BBB-'.

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

Applicable Criteria

Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage (pub. 17 Aug 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=869362

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=993239

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst
Stephen Brown, +1-312-368-3139
Senior Director
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
Craig D. Fraser, +1-212-908-0310
Managing Director
or
Committee Chairperson
Monica M. Bonar, +1-212-908-0579
Senior Director
or
Media Relations:
Alyssa Castelli, New York, Tel: +1 212-908-0540
alyssa.castelli@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Stephen Brown, +1-312-368-3139
Senior Director
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
Craig D. Fraser, +1-212-908-0310
Managing Director
or
Committee Chairperson
Monica M. Bonar, +1-212-908-0579
Senior Director
or
Media Relations:
Alyssa Castelli, New York, Tel: +1 212-908-0540
alyssa.castelli@fitchratings.com