Goodyear makes round of changes to add third-lien tranche, reduce spreads; Allied Waste active

By Sara Rosenberg

New York, March 18 - The Goodyear Tire & Rubber Co. upsized its credit facility by adding a third-lien tranche, cut pricing on its second-lien term loan by 50 basis points and cut pricing on its asset-based loans by 25 basis points.

Meanwhile, in the secondary, Allied Waste Industries Inc.'s new bank debt continued to be somewhat in the spotlight in an otherwise quiet pre-weekend market.

On Friday, Goodyear announced that it added a $300 million third-lien secured term loan (B-) due March 2011 to its approximately $3.35 billion in-market credit facility.

Price talk on the third-lien term loan is in the Libor plus 325 basis points area, according to a market source.

The tranche, which is secured equally with Goodyear's existing secured bonds due in 2011, is non-callable for one year, callable at 101 in year two and callable at par thereafter, the source added.

JPMorgan and Deutsche Bank Securities Inc. are joint lead arrangers on the third-lien term loan.

In addition to putting this new third-lien piece into the proposed capital structure, Goodyear was also able to reduce pricing on its $1.2 billion second-lien term loan (B2/B+) to Libor plus 275 basis points from Libor plus 325 basis points, the source said.

The second-lien term loan, which is also being led by JPMorgan and Deutsche, is non-callable for six months, callable at 101 for the next six months and callable at par thereafter.

Lastly, Goodyear reverse flexed pricing on its $1.5 billion asset-based loans (Ba3/BB) - comprised of a $1 billion revolver and a $500 million term loan (otherwise known as a deposit funded term loan) - to Libor plus 175 basis points from Libor plus 200 basis points, a sellside source said.

JPMorgan and Citigroup are joint lead arrangers on the asset-based facility, with JPMorgan the left lead.

Goodyear's five-year facility also contains and a euro equivalent of $650 million in credit facilities (B+) for its Goodyear Dunlop Tires Europe affiliate.

The euro facility was marketed in Europe via joint lead arrangers JPMorgan and BNP Paribas, with JPMorgan the left lead.

Proceeds from the new credit facility (excluding the third-lien term loan) will be used to refinance an approximately $3.3 billion credit facility consisting of a $1.3 billion asset-based credit facility due March 31, 2006, a $650 million asset-based term loan due March 31, 2006, a $680 million deposit funded credit facility due Sept. 30, 2007 and $650 million in credit facilities for the Goodyear Dunlop Tires Europe affiliate due April 30, 2005.

Proceeds from the $300 million third-lien term loan will be used for general corporate purposes, a company spokesman told Prospect News on Friday.

"We have been refinancing our various debt instruments, basically extending the maturities on them. That has been principally the strategy we've had this past year.

"The demand we've seen for [the $3.35 billion credit facility] has been very, very solid so we created this other piece to give lenders who wanted to get involved another vehicle that they could participate in," the spokesman added.

Goodyear's facility was off to a good start from day one as early commitments rolled in immediately after the deal launched in late February via an extremely well attended bank meeting, and existing lenders were expected to account for a good amount of orders.

And, although the new asset-based facility is priced with a much lower interest rate than the existing asset-based facility - Libor plus 200 basis points compared to Libor plus 400 basis points - it was expected that existing lenders would roll over their positions rather then give up the paper given the current market environment where supply has not been able to keep up with demand.

Closing on the Akron, Ohio, tire company's new facility is expected to occur in early April.

Allied Waste activity continues

Allied Waste Industries Inc.'s strip of term loan B and funded letter-of-credit debt continued to be a focus in Friday's market with the paper quoted at 101 3/8 bid, 101¾ offered - basically unchanged on the day, according to a trader.

The paper first began trading on Thursday with most of the activity taking place in these "strip" trades.

Allied Waste is a Scottsdale, Ariz., waste services company.

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