S&P Afms Carpenter Tech; Talley Mfr & Tech OffWatch.

NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 12/5/97--Standard & Poor's today raised its senior secured debt rating of Talley Manufacturing & Technology Inc. to single-`A'-minus from single-`B'. In addition, the single-`B'-plus corporate credit ratings of Talley Industries Inc. and

Additionally, Standard & Poor's affirmed its single-`A'-minus corporate credit rating and senior unsecured debt rating of Carpenter Technology Corp. The rating outlook is negative.

These actions follow the completion of a tender offer by Carpenter Technology Corp. for all the outstanding shares of Talley Industries Inc. on Dec. 4, 1997. Based on a preliminary count from the depositary for the offer, approximately 74.4% of Talley's outstanding shares of common stock and convertible preferred stock have been tendered. Standard & Poor's anticipates that the merger, with aggregate transaction value of $312 million, will be finalized in the first quarter of 1998. Pursuant to this merger, Carpenter Technology will assume Talley's outstanding debt obligations currently totaling some $125 million. As a result, the rating on Talley's outstanding debt is equalized with that of Carpenter Technology. Although Carpenter's debt leverage will increase to an aggressive level in order to finance the transaction, ratings anticipate that the company will issue over $100 million of common stock in the near term and apply the proceeds toward debt reduction. Additionally, Standard & Poor's expects Carpenter to use the proceeds from the anticipated sale of Talley's nonstainless steel operations to further reduce debt.

OUTLOOK: NEGATIVE

If Carpenter does not reduce debt leverage to previous moderate levels in the mid-30% area in a reasonable time period, ratings could be lowered, Standard & Poor's said. -- CreditWire

CONTACT: Laura Christopher, New York (1) 212-208-1889