Moody’s places GE ratings under review for possible downgrade

Moody’s places GE ratings under review for possible downgrade

(Reuters) – Credit ratings agency Moody’s Investor Service said on Tuesday it has placed ratings of General Electric Co (GE.N) and its finance unit under review for a possible downgrade, a day after the conglomerate replaced its chief executive officer and announced a $23 billion charge.

FILE PHOTO: The General Electric logo is pictured on the General Electric offshore wind turbine plant in Montoir-de-Bretagne, near Saint-Nazaire, western France, November 21, 2016. REUTERS/Stephane Mahe/File Photo

The review was prompted by weakness in GE’s power business, Moody’s said.

GE said on Monday it would take a roughly $23 billion charge to write off goodwill in its power division and would fall short of its forecast for free cash flow and earnings per share for 2018 due to weakness in the business.

The company also ousted CEO John Flannery, replacing him with board member Larry Culp, who is known for turning around industrial equipment supplier Danaher Corp (DHR.N).

While the latest change was an additional concern for the review, which will be addressed within a few weeks, a potential downgrade of the long-term ratings of GE and GE Capital may not be limited to one notch, Moody’s said.

GE shares reversed course and fell about 2 percent to $11.85 in morning trading.

The company’s shares gained as much as 16 percent on Monday, but are still down about 31 percent for the year.

Reporting by Arunima Banerjee in Bengaluru; Editing by Sriraj Kalluvila

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