The Goodyear Tire & Rubber Company has added a six-year, $300 million third-lien loan that will increase liquidity and help address a maturing obligation for ¤400 million due in June 2005. A spokesman for the tire company said the addition to the company's bank debt came as a result of strong demand in the loan. "We looked at what we could do to give investors an additional opportunity to take part in [the loan]," he said. It will be priced at LIBOR plus 3 1/4% and is anticipated to close in early April.
Goodyear's debt also consists of a $1.5 billion, asset-based facility arranged by J.P. Morgan and Citigroup; a $1.2 billion, second-lien term loan arranged by J.P. Morgan and Deutsche Bank and the euro equivalent of $650 million in credit facilities for Goodyear Dunlop Tires Europe, led by J.P. Morgan and BNP Paribas. All the facilities are due in 2010 (LMW, 2/25). The first lien and second lien were also repriced as part of the latest transaction. The first lien pricing has been reduced by 25 basis points to LIBOR plus 1 3/4% and the second lien was reduced by 50 basis points to 2 3/4%.
The loan is pari passu with $650 million of junior lien notes issued in March 2004 and is rated B3 by Moody's Investors Service. Moody's outlook is still negative due to uncertainties and prospective delays associated with the company's need to restate previous financial statements, an examination by its auditors of internal control matters and a lingering Securities and Exchange Commission investigation.