On August 17, soon after TRW Automotive Holdings Corp. (TRW) reported better-than-expected second-quarter results, Standard & Poor’s (S&P) raised its outlook on the company from “Negative” to “Stable”.

According to S&P, the auto-parts manufacturer’s sustained cost-cutting initiatives are likely to help cash flow despite the production slump in North America and Europe.

TRW also raised $269 million through a public offering recently. The offering of 16.1 million shares included 2.1 million shares sold in an over-allotment option granted to underwriters. The shares were priced at $17.50 each. The company had 101 million shares outstanding on July 27.

TRW plans to use $87 million of the net proceeds to repay money borrowed under two loans according to its credit agreement. The rest of the proceeds will be used to repay its revolving credit facility.

As of July 3, the company had $3,040 million of debt and $571 million of cash and marketable securities, resulting in net debt (defined as debt less cash and marketable securities) of $2,469 million.

In the second quarter, TRW earned 8 cents per share as opposed to the Zacks Consensus Estimate of a loss of 81 cents, despite a 39% year-over-year decline in sales. Earlier, the credit rating agency had predicted a nearly 30% drop in 2009 revenue, but now sees sales increasing modestly in 2010.

S&P expects the market for light vehicles to remain weak in 2010. However, the agency does not plan to downgrade TRW in the coming year.

Read the full analyst report on “TRW”
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