Goodyear to redeem $650M in notes
Goodyear Tire & Rubber Co. has called for the redemption of all of its outstanding $650 million of senior secured notes due in 2011.
Deadline for redemption is March 3, 2008.
"The redemption will result in annualized interest expense savings of approximately $75 million to $80 million, of which about $65 million will be realized in 2008," say Goodyear officials.
The notes are comprised of $450 million of fixed rate notes, which currently bear interest at 11.25%, and $200 million of floating rate notes, "which currently bear interest at LIBOR plus 825 basis points."
The contractual redemption prices are 105.5% of the principal amount of the fixed rate notes and 104% of the principal amount of the floating rate notes. In each case, accrued and unpaid interest will be paid to the redemption date.
"These notes are our highest cost debt," says Damon Audia, Goodyear's vice president and treasurer.
"Eliminating them is another step in our debt reduction process and helps us move closer to achievement of our next stage metrics."