Goodyear's Keegan responds to debt downgrade
On Tuesday, Standard & Poor's Ratings Services (S&P) lowered its rating of Goodyear debt two "degrees," from "BB+" to "BB-." Today, Goodyear President Bob Keegan responded.
"We are disappointed in the S&P decision. While we understand their assessment that we need to improve our operational and financial performance, we already have a plan in place to achieve these objectives," said Keegan, who will take over as CEO on Jan. 1. "That plan involves revitalizing our North American consumer replacement tire business, building on the strong improvements we have made in other operations, and restoring revenue and earnings growth momentum, which, in turn, will build value for all our stakeholders.
"Our North American Tire business clearly faces several challenges, and we have already taken decisive action to regain momentum in the market. We are also improving our operational performance, including ongoing cost-cutting
efforts and the implementation of successful initiatives that have worked well in our six other divisions. These initiatives are being spearheaded by the new president of North American Tire (Jonathan Rich), whose track record includes the turnaround of our Chemicals business.
"Goodyear remains fundamentally sound, with many strengths to build on," said Keegan. "We
have some of the world's most recognizable brands, a solid management team in place and outstanding people throughout the company. We are achieving continued strong operational performance in six of our seven divisions,
which have dramatically improved their results throughout 2002.
"We believe that with the continued support of our key constituencies, we will have adequate
cash flow and liquidity to meet our financial obligations. We will continue to provide quality products and services to our customers and to be a reliable customer for our suppliers.
"The year 2003 clearly will be a transition year
for Goodyear, as we take the steps necessary to properly position the company strategically, operationally and financially for long-term strength and success. We believe that these steps will result, over time, in a restoration
of our credit ratings to investment grade levels," he concluded.
According to Goodyear, some of the company's accounts receivable financing arrangements
in the U.S. and Europe require a minimum S&P credit rating as a condition to borrowing. The company says the S&P ratings decision puts the company at the minimum required rating, "but does not affect its ability to access these financing arrangements."