Goodyear Tire & Rubber Co. has closed on an amendment and restatement of three of its credit facilities. Significant changes to the amended and restated agreements include:
* With respect to the company's $1.5 billion asset-based revolving credit facility, an extension of its maturity until 2013, a reduction of the applicable interest rate by between 50 and 75 basis points (depending on availability of undrawn amounts) and a more flexible covenant package.
* With respect to the company's $1.2 billion second lien term loan, an extension of its maturity until 2014, a reduction of the applicable interest rate by 100 basis points (to be further reduced by 25 basis points if Goodyear's credit ratings are "BB-" and "Ba3" or higher) and a more flexible covenant package.
* With respect to the company's euro 505 million European credit facility, the conversion of the euro 155 million term loan portion of
the existing facility to a revolving facility, an extension of its maturity until 2012, a reduction of the applicable interest rate by 75 basis points (as compared to the existing European revolving facility) and 37.5 basis points (as compared to the existing European term loan) and a more flexible covenant package.
"This refinancing action reduces our interest expense, creates
additional operational flexibility, extends maturities and helps address our efforts to improve Goodyear's balance sheet," says Chief Financial Officer Richard Kramer, who is also president of North American Tire. "We anticipate annualized interest expense savings of $15 million to $20 million."
