FINDLAY, Ohio—Cooper Tire & Rubber Co. has completed the sale of its Cooper-Standard Automotive division to an investors´ group partnership, but the sale didn´t change Cooper´s Standard & Poor´s Ratings Service rating, which remains on its CreditWatch with negative implications.
Cooper and an entity formed by Cypress Group and Goldman Sachs Capital Partners concluded the approximately $1.17 billion deal shortly before year-end. The buyer will hold $30 million of the purchase price until the post-closing working capital adjustments can be completed.
The sale covers 47 plants and operations of Novi, Mich.-based Cooper-Standard, which makes fluid handling systems, body sealing systems and active and passive vibration control systems for automotive original equipment manufacturers. The unit posted sales of about $1.6 billion in 2003 and was on track after three quarters to post 2004 sales of more than $1.7 billion.
Cooper said proceeds from the sale will be used for debt reduction, the repurchase of shares and investment in its tire operations. Cooper also announced its intention to allocate about $60 million of the proceeds to fund various pension plans related to continuing operations. No further specific allocation for the use of proceeds was provided.
S&P, in a news release following Cooper´s announcement of the closing of the sale, said the magnitude of share repurchases relative to debt reduction could have a negative impact on Cooper´s credit quality. Cooper´s cash flow also will decline because of the sale, while future investments in the firm´s tire operations could have long-term benefits for the company, S&P said.