Goodyear commits to financing moves, unions may strike if deals not completed

By Peter Heap

New York, Nov. 19 - Goodyear Tire & Rubber Co. said it has committed to issue new bonds, equity or equity-linked securities and to refinance its term loan and revolving credit facilities - and the United Steelworkers of America has the right to go on strike if the transactions are not completed.

The financing commitments are included in Goodyear's new master contract with the USWA, the Akron, Ohio tiremaker said in a filing with the Securities and Exchange Commission.

Under its terms, Goodyear will sell at least $250 million of debt securities and at least $75 million of equity or equity-linked securities by Dec. 31. If it does not meet this commitment, the USWA may file a grievance and strike.

Goodyear has also committed to launch a refinancing of its U.S. term loan and revolving credit facilities due April 2005 by Dec. 1, 2004. The refinancing can be with loans or securities having a term of at least three years. If the company fails to meet this commitment the USWA would have the right to strike and Goodyear would be required to pay each covered union employee $1,000 and each covered union retiree $500. As of Sept. 30, there were 15,300 covered employees and 13,800 covered retirees.

Goodyear also committed to remain in compliance with the covenants covering interest expense coverage ratio, consolidated net worth and senior secured indebtedness ratio in its U.S. revolving credit facility. If it fails to comply with these covenants, the company has agreed to use its best efforts to seek a substantial private equity investment.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.