Fitch upgrades Goodyear

Fitch Ratings said it upgraded the Goodyear Tire & Rubber Co.'s issuer default rating to B+ from B, its $1.5 billion first-lien credit facility and its $1.2 billion second-lien term loan to BB+/RR1 from BB/RR1, its $300 million third-lien term loan and $650 million third-lien senior secured notes to BB-/RR3 from B/RR4, its senior unsecured debt to B-/RR6 from CCC+/RR6 and Goodyear Dunlop Tires Europe BV's €505 million European secured credit facilities to BB+/RR1 from BB/RR1.

The outlook is positive.

The agency said the upgrade reflects the positive impact on Goodyear's balance sheet of the recent sale of common stock for approximately $834 million in net proceeds. Goodyear used the proceeds to redeem $175 million of outstanding 8 5/8% notes due 2011 and $140 million of 9% notes due 2015. The ratings and outlook also incorporate Goodyear's pending sale of its engineered products business for nearly $1.5 billion.

The proceeds from both transactions strengthen Goodyear's liquidity as it recovers from the labor strike in 2006, continues with its multi-year program to reduce its cost structure and further implements its strategy to exit certain segments of the private label tire business and expand its higher-margin premium tire business, Fitch said.

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