AKRON (Feb. 12)—Goodyear plans to make a private offering of about $650 million in senior secured notes.
It will use the proceeds from the offering to repay its U.S. term loan; to reduce a portion of the commitments under its U.S. revolving credit facility; to repay other indebtedness, including temporary reductions of outstanding balances under its revolving lines of credit; and for general corporate purposes.
The $650 million notes offering is separate from a $650 million term loan it hopes to obtain to be used for general corporate purposes. The firm said in early February that J.P. Morgan Chase & Co. Inc. and Citigroup Inc. are arranging a syndication to add the loan to the company's $1.3 billion asset-based credit facility.
Goodyear has commenced discussions with the lenders under its senior secured credit facilities to amend those agreements to allow for future capital markets transactions. The tire maker originally said Jan. 27 the loan would be for $300 million, but announced the new figure Feb. 3.
Standard & Poor's lowered its rating on Goodyear's $1.3 billion bank loan and $120 million in notes to B+ from BB on Wednesday. That decision was made because of the tire maker's plans to seek the $650 million loan which Standard & Poor's indicated reduces the firm's asset protection.
Meanwhile, the firm's stock dropped 96 cents to close at $8.96 in trading Feb. 11 on the New York Stock Exchange.