- The Washington Times - Tuesday, August 13, 2002

A deal to refinance $100 million in convertible bonds and a "back-to-basics" strategy are helping Orbital Sciences Corp. increase revenue and strengthen its stock, analysts say.
The Sterling, Va., manufacturer of space systems, rockets and satellites announced Friday it would use net proceeds to retire the existing bonds maturing Oct. 1.
The move will likely raise Orbital from its low credit rating of CCC-plus, said Christopher Denicolo, Standard & Poor's analyst who monitors Orbital's debt issues.
"We had Orbital on a credit watch and lowered their ratings, but that rating is definitely going to be raised now that they're refinancing their bonds," Mr. Denicolo said.
Standard & Poor's will meet with Orbital next week to determine its business plans and a new rating, he said.
The refinancing agreement has made the stock a stronger buy, said Paul Nisbet, a JSA Research Inc. aerospace analyst.
"Orbital has reduced total debt by two-thirds in the last couple of years and had two good financial quarters with clean earnings," Mr. Nisbet said, adding that a high-risk-investment warning on the company stock had been dropped.
Orbital stock closed yesterday at $4.32, up 54 percent from a six-month low of $2.81 earlier in August.
"It has a lot to do with [Orbitals] campaign to focus their efforts on manufacturing satellites and rockets and reducing debt," Mr. Nisbet said. "We are projecting that the stock will be at $8 by the year end with at least a 75 cent per-share increase for the next quarter."
The campaign included Orbital selling four of its subsidiaries in the past couple of years to refine the company's operations, Orbital spokesman Barron Beneski said. "It really freed us up to concentrate on our two main manufacturing areas of satellites and rockets and expand within those divisions."
The moves also boosted the company's earnings for the second quarter ended June 30 to $5.4 million (12 cents per diluted share), an improvement from a net loss of $25.1 million (66 cents) a year earlier.
Part of that was due to increased defense spending by civil government, such as NASA, and the Department of Defense, Mr. Beneski said.
"These continual contracts with the government on things like missile defense systems and telecommunications satellites help sustain business and strengthen earnings," he said.

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