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TEXT-S&P may cut Oshkosh 'BB' corporate credit rating

(The following statement was released by the rating agency)

Overview

-- Carl Icahn has offered to buy all the outstanding shares of specialty vehicle manufacturer Oshkosh Corp.

for $32.50 per share.

-- We are placing our ratings on Oshkosh, including the 'BB' corporate credit rating, on CreditWatch with negative implications.

-- We will resolve the CreditWatch listing when more information regarding the proposed transaction becomes available. We will then assess Oshkosh's financial policy and the impact of any potential transaction on its capital structure.

Rating Action On Oct. 12, 2012, Standard & Poor's Ratings Services placed its ratings on Oshkosh, Wis.-based Oshkosh Corp., including the 'BB' corporate credit rating, on CreditWatch with negative implications.

Rationale

The CreditWatch placement reflects uncertainty regarding the leverage profile for Oshkosh and its strategic direction following reports that the company has received a buyout offer from Carl Icahn for $32.50 per share, valuing the company at close to $4 billion including debt.

As we had previously noted, Carl Icahn and related entities had disclosed beneficial ownership of about 9.5% of Oshkosh stock in July 2011, through a combination of shares and call options. Although unsuccessful in electing any of his six nominees in January 2012 following a proxy fight, the Icahn-led ownership and potentially heightened shareholder focus caused some uncertainty as to the strategic direction of the company and had the potential to result in a more aggressive financial policy.

Yesterday's announced tender offer for Oshkosh's shares has increased risks related to our assessment of the company's financial risk profile, which we currently assess as "significant" because of uncertainty as to how the proposed transaction will be financed and the potentially more aggressive policy an Icahn-owned entity could pursue.

Further, possible strategic actions could result in a change in our assessment of the company's business risk profile, which we currently view as "satisfactory." For instance, Icahn has recently indicated a desire to have Oshkosh spin off its aerial work platform segment, which represents a significant portion of revenues and profits. We expect the unit to represent more than half of operating profit in fiscal 2013.

CreditWatch

We will resolve the CreditWatch listing when more information regarding the proposed transaction becomes available. We will then assess the company's financial policy and the impact of any potential transaction on the company's capital structure or operating strategy.

Related Criteria And Research

-- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011

-- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, May 27, 2009

-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

Ratings List Ratings Placed On CreditWatch Negative To From Oshkosh Corp. Corporate Credit Rating BB/Watch Neg/-- BB/Stable/-- Senior Secured BBB-/Watch Neg BBB- Recovery Rating 1 1 Senior Unsecured BB/Watch Neg BB Recovery Rating 4 4

(Caryn Trokie, New York Ratings Unit)

((Caryn.Trokie@thomsonreuters.com; 646-223-6318; Reuters Messaging: rm://caryn.trokie.reuters.com@reuters.net))

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