S&P: Goodyear on positive watch

Standard & Poor's said it placed its B+ long-term and B-2 short-term corporate credit ratings and certain other ratings on Goodyear Tire & Rubber Co. on CreditWatch with positive implications, reflecting the company's announcement that it intends to issue common equity and use a substantial amount of proceeds for debt reduction.

Proceeds are expected to be at least $725 million, net of fees, to be used to repay $175 million of its 8.625% notes due in 2011 and $140 million of its 9% notes due in 2015, the agency said.

S&P added that it expects some of the remaining proceeds would be used to repay other debt.

If the equity offering is completed and proceeds deployed as expected, the agency said it would likely raise the corporate credit rating one notch to BB-, adding that the proposed equity offering reflects Goodyear's continuing trend of addressing its aggressive financial risk profile, which has been characterized by low earnings in North America, a leveraged capital structure and significant underfunded employee benefit liabilities.

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