Goodyear Settles Minority Shareholder Unease in Poland

A disagreement between Goodyear and the largest minority shareholder in its Polish TC Debica operation has been resolved. On February 26 the US tyre major agreed with Polish investment fund PZU Asset Management that it would increase its stake in and significantly increase its production of commercial vehicle tyres.

The dispute originated in allegations from minority shareholders that Goodyear was harming their interests through intra-group transactions that diminished TC Debica’s results in favour of those of the parent company. After disappointing third-quarter results PZU Asset Management, which holds about 15 per cent of TC Debica shares, and other investors called for a shareholders meeting to appoint an independent auditor to investigate the relationship between Debica and Goodyear.

Goodyear will now offer minority shareholders two seats on TC Debica’s supervisory board, and establish a neutral committee within the board to review transactions between the two companies. The company has pledged to make purchasing the remaining shares in Debica within the next 18 months a priority, and in the short-term will call a tender valued at US$40 to 45 million to increase its shareholding in Debica from 59.87 per cent to 65.99 per cent. The announced tender is scheduled to take place between March 6 and March 20. TC Debica will remain listed on the Warsaw Stock Exchange, Goodyear commented.

“This agreement, which is consistent with our stated strategies, is another example of Goodyear’s clear commitment to TC Debica’s long-term value and stability,” said Darren R. Wells, senior vice president of finance and strategy for Goodyear S.A.’s parent, Goodyear Tire & Rubber. “Since Goodyear became the majority shareholder 13 years ago, TC Debica’s operations have grown dramatically – nearly doubling the number of tyres manufactured daily – and it has evolved from being a largely domestic manufacturer of low-cost tyres to a provider of increasingly high-value tyres to markets throughout Europe and elsewhere in the world.”

“The agreement between our two companies is our joint success. Both parties were open to discussions and proposals, which allowed us to reach the agreement in a very short time, to the satisfaction of all the parties concerned. Goodyear, beyond any doubt, is a commendable partner to talk to, following the principles of corporate governance and their shareholders’ interests,” said Piotr Osiecki, the former deputy president of the Management Board of PZU AM and chief negotiator for PZU.

Debica’s earnings should increase to about 90 million zlotys (£19.2 million) in 2008, says Goodyear, with further growth in 2009 fuelled by increasing the output of commercial tyres to 5,000 units a day, to meet increasing demand throughout Europe. Goodyear reports that, dependent on TC Debica obtaining appropriate tax incentives under Debica’s Special Economic Zone, this expansion of production would make TC Debica one of Goodyear’s largest suppliers of commercial truck tyres in the world and would provide TC Debica with additional state-of-the-art technology from Goodyear.