Own a piece of Goodyear

March 28, 2011

Goodyear Tire & Rubber Co. has commenced a public offering of $435 million of mandatory convertible preferred stock, subject to market and other customary conditions. The offering consists of 8.7 million shares with an offering price of $50 per share.

The company intends to grant the underwriters of the offering a 30-day option to purchase up to an additional 1.3 million shares of mandatory convertible preferred stock. Unless converted earlier, the mandatory convertible preferred stock will convert automatically into a variable number of shares of the company’s common stock on April 1, 2014.

The conversion rate will be determined by the price of the company’s common stock on that date. The dividend rate and the conversion terms of the mandatory convertible preferred stock will be determined by negotiations between Goodyear and the underwriters.

The company estimates the net proceeds from this offering, after deducting underwriting discounts, commissions and expenses, will be approximately $421 million. The estimated net proceeds would be approximately $484 million if the underwriters exercise their option to purchase additional shares in full.

Goodyear intends to use the net proceeds from the offering to redeem $350 million in principal amount of its outstanding 10.500% senior notes due May 15, 2016 at the redemption price of 110.500% of the principal amount plus accrued and unpaid interest to the redemption date. This redemption is pursuant to provisions of the notes that allow the company, at its option, to redeem up to 35 percent of the original principal amount with proceeds from one or more equity offerings.

For additional information click here.