Goodyear starts exchange offer for 4% convertibles

By Jennifer Chiou

New York, Nov. 6 - Goodyear Tire & Rubber Co. announced the launch of an exchange offer for any and all of its $349.8 million of 4% convertible senior notes due June 15, 2034 for a cash premium and shares of its common stock.

The company said that the exchange offer allows holders of convertible notes to receive the same number of shares of the company's stock as they would receive upon conversion of the convertible notes, plus a cash premium and accrued and unpaid interest.

The notes are convertible at a rate of 83.0703 shares per $1,000 principal amount, which is equal to a conversion price of $12.04 per share.

For each $1,000 principal amount, holders will also receive a cash payment of $48.30 as well as accrued interest up to, but excluding, the exchange date.

The offer ends at 5 p.m. ET on Dec. 5.

On Oct. 16, the company said that the notes will remain convertible through Dec. 31.

As previously reported, the notes became convertible into cash or shares because the last reported sale price of the company's common stock for at least 20 trading days during the 30 consecutive trading-day period ended on Oct. 15, the 11th trading day of the current quarter, was greater than 120% of the conversion price.

"This exchange offer is another step in our plan to further de-lever and improve our capital structure," said W. Mark Schmitz, executive vice president and chief financial officer, in a news release.

"This allows us to reduce our debt by as much as $350 million, save up to $14 million a year in interest and simplify our balance sheet."

The exchange agent is Wells Fargo Bank, NA (800 344-5128). The dealer manager is Goldman, Sachs & Co. (800 828-3182).

Goodyear is an Akron, Ohio-based tire manufacturer.

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