US: Goodyear borrows $US1bn for strike

By just-auto.com editorial team | 16 October 2006

The Goodyear Tyre & Rubber Company has significantly enhanced its cash position by borrowing nearly $US1bn under an existing revolving credit facility.

The company said it borrowed approximately $675m on 13 October and $300m on 5 October under its $1.5bn US first lien credit facility. Thus, this particular facility is almost fully drawn, when including its $500m deposit-funded facility.

"Before the start of the United Steelworkers strike in North America, Goodyear had about $1.3bn in cash and cash equivalents and approximately $1.6bn in available credit lines," said chief financial officer Richard Kramer. "This action provides additional cash in the unlikely event of a prolonged strike."

Goodyear has implemented contingency plans to meet customer needs during the strike, which began on 5 October at 16 facilities in the United States and Canada.

"We are shipping products to customers from existing inventory, operating non-affected tyre plants as usual, operating affected plants with salaried employees and importing from our international operations," Kramer said.

Kramer reiterated Goodyear's position that its goal in the negotiations with the USW is to reach a fair contract that enhances the company's competitiveness and helps Goodyear win with customers.

"We cannot accept a contract that creates competitive and cost disadvantages versus our foreign-owned competitors and imports," he said.