Goodyear to offer $1 billion in senior notes

Akron, Ohio - Goodyear intends to raise about $1000 million by issuing three- and five-year senior loan notes to repay some maturing debts and also fund general expenses, including costs from the ongoing United Steelworkers strike.

Goodyear said the final value of the loan offering will be subject to market and other conditions. The notes will be senior unsecured obligations of the tyre maker.

Funds from the offering will be used to repay $515 million of existing notes due Dec. 1 and March 1. Remaining cash from the offering will be used for general corporate purposes, the firm said.

The Steelworkers union has been on strike at 16 of Goodyear's North American plants since Oct. 5. Goodyear officials said the strike initially was costing the company about $30 million to $35 million in lost operating income per week.

The United Steelworkers union criticised the move. "Goodyear is already carrying about $6.4 billion dollars in debt, and its credit is poor and getting worse," said USW International President Leo W. Gerard. "Now they plan to borrow more money to flush down a rat hole of a fight they can never win."Tom Conway, USW International vice president, who heads the union´s Goodyear bargaining team, said the move is the "wrong thing for the wrong reason at the wrong time."

"When you borrow money, you have to pay it back, and to pay it back Goodyear needs to build tires that people want to buy," Conway said. "This company has no such plan in place."

From Rubber & Plastics News (A Crain publication)