UPDATE 1-GE to cut GE Capital leverage ratio to 6-to-1

BOSTON, Feb 10 - General Electric Co plans to shift about $9.5 billion into its GE Capital finance unit during the first quarter, to cut its debt leverage ratio to 6 to 1 from a prior level of 7 to 1, the U.S. conglomerate's chief financial officer said on Tuesday.

"Our plan for 2009 was to get to 6 to 1 leverage by the end of the year and we just decided to take the cash that we have sitting at the parent and infuse it into GE Capital," GE CFO Keith Sherin told investors. "We had a target to get to 6-to-1 leverage by the end of the year and we just decided to get there right now. I think it's a better place to be, it's a lower risk profile."

He repeated GE's position that it plans to target a triple-A credit rating, although he acknowledged that decision is out of the hands of GE management. Both Standard & Poor's and Moody's Investors Service are now reviewing their "AAA" ratings on the world's largest maker of jet engines and electricity-producing turbines.

"We don't control our destiny here," Sherin said. "We're committed to running the company like a triple-A and whether or not that matches what the ratings agencies ultimately decide, we'll have to see."

It could be months before the company announces a final decision on whether it will continue to pay its current 31 cents per share quarterly dividend after the second quarter. GE said on Friday it would evaluate the level of its dividend.

"We're trying to decide, has the world changed enough? Is the outlook in 2010 uncertain enough? Is this the best capital allocation decision in the second half, to have a payout ratio at the levels it's at? Is it sustainable in the long term? Those are all the discussions we're having with the board," Sherin said. "In the next couple of weeks and months, hopefully we'll come out with some clarity and guidance on that."

GE shares were down 9 percent, or $1.14 cents, at $11.50 in afternoon trading on the New York Stock Exchange. The sell-off came on a day U.S. stocks were broadly lower among fear on Wall Street the Obama administration's plan to shore up the financial sector may not be enough to to contain the current recession.