Goodyear Gets Breathing Space From Creditors

By Agence France-Presse Goodyear Tire & Rubber Co., the world's largest tire maker, said Feb. 6 it had won extra breathing space from creditors amid deepening concern over its liquidity position. The Akron, Ohio-based firm said it had secured a one-month waiver on a $500 million payment to its pension plans and hoped to "meet the current challenges" after further talks with lenders. Goodyear had announced Tuesday it was scrapping quarterly dividend payouts to shareholders in a bid to save more money, sending its stock into a dive. Merrill Lynch & Co. Inc. said it was lowering its rating on the company stock from "neutral" to "sell". Goodyear said it had been in discussions with lenders to modify the terms of some loan agreements. "The successful completion of these actions -- accompanied by steps we have taken to enhance our revenue, improve our cost structure, preserve cash and strengthen our balance sheet -- should provide us the financial resources, including access to capital markets, to meet the ongoing needs of our business and drive our turnaround," said Goodyear President and CEO Robert J. Keegan. Lenders granted Goodyear waivers until March 7 to comply with covenants requiring it to contribute about $500 million to its pension plans in excess of federal requirements. The covenants also would have required the company to maintain a minimum net worth. Under the waivers, Goodyear said it had access to about $1.1 billion in two revolving credit facilities. In addition, Goodyear had more than $600 million in cash on hand at the end of January. The group said it had about $300 million in other committed lines of credit and $400 million in uncommitted lines of credit available as of Dec. 31, 2002. Goodyear said that its domestic accounts receivable facility was amended in December 2002 and extended for 10 months until December 2003 by a group of four banks. Among the amended terms was a change in the minimum credit rating requirement to BB minus/Ba3. Goodyear also had international accounts receivable facilities totaling approximately $400 million, it said. Copyright Agence France-Presse, 2003