S&P removes Goodyear from CreditWatch

Akron, Ohio - Standard & Poor's Rating Services affirmed its B+ rating on Goodyear but removed the tyre maker from CreditWatch following the ratification of a new labour contract and the return to work of striking employees.

S&P had put Goodyear on CreditWatch with negative implications in October after the United Steelworkers called a strike at 16 North American facilities. The union approved a new pact in late December and began returning to work on 2 Jan.

Goodyear's total debt - including $1000 million of new debt sold during the strike, operating leases and underfunded employee benefit liabilities - of about $12 000 million, S&P said.

"The new contract should enable Goodyear to achieve substantial cost savings over the three-year contract term," S&P said in a statement.

Goodyear previously said it expects to save $70 million in 2007, $240 million in 2008 and $300 million in 2009.

Goodyear's stock price also has benefited from the end of the strike. The stock rose 4.9 percent to $20.99 on Dec. 29, when the union said its membership ratified the contract.

From Rubber & Plastics News (A Crain publication)