Moody's: Goodyear convertible B3

Moody's Investors Service said it assigned a B3 rating to the proposed $ 150 million convertible note issuance of Goodyear Tire & Rubber Co. The proposed convertible notes will be unsecured and rank equally with Goodyear's other senior, unsecured and unsubordinated debt.

Moody's said that although the issue will incrementally assist Goodyear in achieving its financial restructuring by improving liquidity, marginally lengthening the debt maturity profile and raising the amount of equity linked capital agreed with its union in late 2003, the company still faces ongoing challenges in restoring consolidated profitability, free cash flow from its operations, and its balance sheet.

The initial use of proceeds includes repayment of revolver borrowings under Goodyear's asset-backed facilities of $70 million and additions to corporate cash of $75 million.

Moody's said the existing ratings and outlook for Goodyear incorporate the company's strong global brand position, its diversified segment and geographic markets, favorable performance of the company's non-U.S. operations, progress made in restructuring its North American Tire unit and existing liquidity with roughly $1.3 billion in unrestricted cash.

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