The Goodyear Tire & Rubber Company is looking to cash in on low interest rates and improved performance by refinancing its bank debt. The company is looking for an April close with the new deal consisting of a $1.5 billion, asset-based credit 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 the company's Goodyear Dunlop Tires Europe affiliate, led by J.P. Morgan and BNP Paribas. "We expect...interest rates will be lower than what they are replacing," said a Goodyear spokesman. All facilities will be due in 2010. A bank meeting was set for last Friday and price talk on the new first-lien debt is LIBOR plus 2%. The second-lien is being offered at LIBOR plus 3 1/4%. This compares to the existing debt, which is priced at LIBOR plus 4 1/2%.
The refinanced loans will replace a $1.3 billion, asset-based credit facility due March 31, 2006; a $650 million asset-based term loan due March 31, 2006, a $680 million deposit funded credit facility due Sept. 30, 2007 and $650 million in credit facilities for the Europe affiliate due April 30, 2005. In addition to refinancing, the company is looking to asset sales to reduce debt, the spokesman said.
In November the company announced an agreement to sell its 95% stake in the Goodyear Sumatra Plantations in Indonesia to Bridgestone Corp. of Japan. "We have not identified any other assets being considered," the spokesman said. "We told people, at the core, we are a consumer and commercial tire business. We are looking at assets beyond that core as candidates that we would consider selling."