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Goodyear seeks to secure $650 million loan

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Goodyear Tire & Rubber Co. intends to increase the amount of a new term loan being arranged by JPMorgan and Citigroup from $300 million to $650 million.

The new term loan would be an addition to Goodyear’s existing $1.3 billion asset-based credit facility.

The proceeds of the loan would be used in three ways:

* to partially repay Goodyear’s existing term loan in the United States,

* to repay "other indebtedness," and

* for general corporate purposes.

The consummation of the transaction will be subject to certain customary conditions, including the receipt of the consent of the lenders holding a majority of the commitments

under each of Goodyear’s senior secured credit facilities.

Goodyear says it has begun discussions with the lenders under its senior secured credit facilities.

Those discussions "will include the amendment of those facilities to allow for the $650 million term loan and future capital markets transactions." They also will provide the new term loan and Goodyear's existing $1.3 billion asset-backed credit facility with a junior lien on certain of the collateral securing the company's other senior secured U.S. credit facilities.

"We are very happy with the level of interest this loan has generated," says Robert Tieken, executive vice president and chief financial

officer. "This allows us to begin refinancing the loans put in place last year and further position the company to access capital markets going forward."

On Jan. 27, Goodyear announced it was seeking the original $300 million loan in an attempt to "enhance its near-term liquidity" and give it greater access to funds in the future.

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