Goodyear to launch $300 million term loan add-on to asset-based facility

By Sara Rosenberg

New York, Jan. 27 - The Goodyear Tire & Rubber Co. is planning to come to market with a $300 million term loan add-on to its existing $1.3 billion asset-based credit facility due March 31, 2006. JPMorgan and Citigroup are the lead banks on the deal, according to a company news release.

Under the current asset-based credit agreement, which consists of a $500 million revolver and an $800 million term loan, the company is permitted to increase the size of the facility by $300 million through extensions of, or increases in, commitments by new or existing creditors, according to a 10-Q filed with the Securities and Exchange Commission on April 30, 2003.

"It's an addition to our existing credit facility so the terms and conditions would stay the same," a company spokesman told Prospect News.

The existing facility carries an interest rate of Libor plus 400 basis points, according to the SEC filing.

However, according to a source close to the deal, the $300 million add-on is being talked at Libor plus 425 to 450 basis points.

Proceeds from the add-on would be used for general corporate purposes.

To successfully close on the deal, the Akron, Ohio, tire company must first get approval from lenders holding a majority of the commitments under the existing credit facility, according to the news release.

The company is also looking to begin talks with lenders about amending its senior secured credit facilities to allow for future capital markets transactions, which may involve the granting of junior liens on some of the collateral securing the senior secured U.S. credit facilities.

A date for the bank meeting for the add-on was not immediately available.

"These actions enhance our near-term liquidity and position us to access the capital markets as we gain traction in our turnaround plan during 2004," said Robert J. Keegan, chairman and chief executive officer, in the release. "I have a high level of confidence in our strategy and in the execution of our plan as we move forward."

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