Goodyear to Draw Portion of its Revolving Credit Facility
Goodyear Tire & Rubber announced September 25 that it intends to draw US$600 million from its existing US revolving credit facility to counter what it says is a ‘temporary delay in its ability to access $360 million of cash currently invested with The Reserve Primary Fund’. The funds drawn also will be used to support seasonal working capital needs and to enhance the company’s cash liquidity position.
According to the US tyre major, the Reserve Primary Fund, a money market fund, has delayed the payment of requested redemptions pursuant to a Securities and Exchange Commission Order allowing an orderly disposition of its securities. Goodyear says its other US cash investments remain fully accessible by the company.
The company also announced on September 25 the expiration of the 30-day period to appeal the US District Court’s Order approving the settlement agreement that established the Voluntary Employees’ Beneficiary Association trust (VEBA), which will provide healthcare benefits to the company’s current and future United Steelworkers (USW) retirees. No appeals were filed. Goodyear now can remove liabilities for USW union retiree healthcare benefits from its balance sheet. As of year-end 2007, these liabilities amounted to approximately $1.2 billion.
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