Goodyear borrows nearly $1 billion to enhance cash position during strike; union responds
Goodyear Tire & Rubber Co. has significantly enhanced its cash position by borrowing nearly $1 billion under an existing revolving credit facility.
The company said it borrowed approximately $675 million on Oct. 13 and $300 million on Oct. 5 under its $1.5 billion U.S. First Lien Credit Facility. Thus, this particular facility is almost fully drawn, when its $500 million deposit-funded facility is included.
"Before the start of the United Steelworkers strike in North America, Goodyear had about $1.3 billion in cash and cash equivalents and approximately $1.6 billion in available credit lines," says Richard Kramer, executive vice president and chief financial officer. "This action provides additional cash in the unlikely event of a prolonged strike."
Goodyear has implemented contingency plans to meet customer needs during the strike, which began on Oct. 5 at 16 facilities in the United States and Canada.
"We are shipping products to customers from existing inventory, operating non-affected tire plants as usual, operating affected plants with salaried employees and importing from our international operations," says Kramer.
Kramer reiterated Goodyear's position that its goal in the negotiations with the USW is to reach a fair contract that enhances the company's competitiveness and helps Goodyear win with customers. "We cannot accept a contract that creates competitive and cost disadvantages versus our foreign-owned competitors and imports."
In an official statement, the union says the length of the strike is entirely up to Goodyear. "The strike will end as soon as Goodyear offers the USW a fair and equitable contract.
"If they want to waste $1 billion dollars of the shareholders' money before they do it, that is sad, but our need for a fair and equitable contract will not change."