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March 07, 2008 01:00 AM

TC Debica gets push for growth

Mike McNulty
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    AKRON (March 7, 2008) — Polish tire maker TC Debica S.A.´s sprawling manufacturing facility probably will get bigger and produce more tires in the near future.

    The company is being urged by Good-year, its largest shareholder, to expand its Debica, Poland, production plant and triple its daily output of commercial truck tires.

    Goodyear, through Luxembourg-headquartered subsidiary Goodyear S.A., also said it plans to increase its stake in TC Debica from 59.8 percent to almost 66 percent through a tender offer that will total between $40 million and $45 million. The offer is being made between March 6 and March 20, according to a Goodyear spokesman.

    That eventually could lead to another tender offer from the Akron-based tire maker to buy the remaining interest in the company.

    A decision on that will be made in the next 18 months, he said.

    While Goodyear has requested that TC Debica expand the tire factory, it needs the approval of the Polish company´s management board. An expansion at the plant will cost about $200 million and create between 350 and 400 jobs, the Akron-based tire maker estimated. About 2,500 currently are employed at the facility.

    The investment likely would include assistance from Polish national and regional governmental agencies, according to Goodyear, which has held the majority interest in the company since 1995.

    "This will be a physical expansion and will be located adjacent to TC Debica´s current plant," the spokesman said.

    If, as expected, TC Debica´s management board approves the proposal, it would become one of the largest truck tire producers in the world, Michael Rzonzef, president of Goodyear´s Eastern Europe, Middle East and Africa operations, said in a release.

    Once the expansion is complete, the facility´s daily production rate would jump to about 5,000 tires a day from the current 1,700 produced daily, the spokesman said. About 86 percent of its tires go to Goodyear or its subsidiaries for the European market, he said, and are sold under the Goodyear, Sava, Dunlop and other brand names.

    Rzonzef said Goodyear plans to share the expertise and technology needed to produce the highest-quality, most advanced truck tires possible.

    Since Goodyear became the majority shareholder in the firm 13 years ago, the Polish company has had dramatic growth, nearly doubling the number of tires it makes daily, said Darren Wells, Goodyear senior vice president of finance and strategy. TC Debica has evolved from a domestic manufacturer of low-cost tires to one that makes high-value products, he said.

    Goodyear has invested more than $200 million in the Polish facility during that span.

    In March 2007, Goodyear said it would spend $100 million to add production of high-performance and ultra-high performance tires. In April 2007, TC Debica and Goodyear launched a more limited $8.5 million truck tire production increase. Both projects are ongoing and not part of the latest plan.

    In terms of the tender offer, Goodyear reached an agreement with PZU Asset Management S.A., acting on behalf of four companies, to increase its investment in TC Debica and to "use its reasonable best efforts to announce a tender offer for the remaining shares in the company" within the next 18 months, Piotr Osiecki, former deputy president of the management board of PZU and the firm´s chief negotiator, said in the statement.

    In addition to the plant in Poland, Goodyear makes tires at factories in Luxembourg, Turkey and Germany in Europe.

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