Goodyear Offers $900 Million in Senior Notes

Goodyear Tire & Rubber Co. announced it has commenced a public offering of US$900 million aggregate principal amount of 10-year senior notes. The offering was increased from a previously announced offering size of $750 million.

According to Tire Review, Goodyear intends to use the net proceeds from this offering, together with its current cash and cash equivalents and unused availability under its credit facilities, to redeem $325 million in principal amount of 8.625 per cent senior notes due 2011 and approximately $388 million in principal amount of 7.857 per cent notes due 2011. Goodyear intends to use the remaining net proceeds for general corporate purposes, which may include the repayment of other outstanding indebtedness. Deutsche Bank Securities Inc., Barclays Capital Inc. and Morgan Stanley & Co. Incorporated served as joint book-running managers for the offering.

Upon the announcement Tuesday of the $750 million offering size, Moody’s Investors Service assigned a non-investment grade rating to Goodyear’s debt offering. Moody’s gave a so-called junk “B1” rating to the latest debt offering and reaffirmed its ratings on Goodyear’s corporate daily and probability of default at “Ba3,” which is also a non-investment grade rating.

The tyre maker’s rating outlook was upgraded to “stable” from “negative,” though, reflecting the likelihood that tire volumes will benefit from a recovery in 2010, Moody’s said.