Goodyear Tire repays debt in Q4, cuts interest expense by $39 million

By Lisa Kerner

Charlotte, N.C., Jan. 12 – Goodyear Tire & Rubber Co. used net proceeds from a $1 billion offering of 5 1/8% senior notes to redeem the outstanding $1 billion in principal amount of its 8¼% senior notes due 2020 during the fourth quarter, according to chief financial officer Laura K. Thompson.

Also during the fourth quarter, Goodyear used net proceeds from a €250 million offering of 3¾% senior notes to redeem the outstanding €250 million in principal amount of its 6¾% senior notes due 2019.

The company will reduce its annual interest expense by $39 million beginning in 2016 as a result of the transactions.

Goodyear is targeting leverage of between 2 and 2.1 times by year-end, providing Goodyear with a greater ability to move debt overseas and to improve its global access to credit, according to Thompson.

Thompson made her remarks during a presentation on Tuesday at the 2016 Deutsche Bank Global Auto Industry Conference in Detroit.

During the presentation, Thompson reviewed the company’s plan to allocate between $3.6 billion and $3.9 billion of capital during 2014-2016. Debt repayment and pension funding is expected to be in the range of $800 million to $900 million, while growth capital expenditure is expected to be roughly $1.15 billion.

Goodyear expects shareholder returns to total between $600 million and $1.25 billion during the period.

Thompson noted that through the third quarter, the Akron, Ohio-based tire company repurchased $313 million of its current share purchase authorization of $450 million, or 11.5 million shares.

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