AKRON (Feb. 17, 2004) — Fitch Ratings has downgraded Goodyear's senior unsecured rating following reports of its ongoing accounting investigation and the formal investigation launched by the Securities and Exchange Commission.
Chicago-based Fitch Ratings downgraded Goodyear's senior unsecured rating to “CCC+” from “B” and also downgraded Goodyear's senior secured bank facilities to “B” from B+.” The rating outlook remains negative.
Goodyear said last week in a filing with the SEC that its own investigation into accounting issues has spread to other overseas operations outside of Europe, and the government regulating agency had told the tire maker it approved a formal investigation into last year's restatement of five years' worth of earnings. Because of these issues, there is a “substantial probability” that the 2003 10-K will not be filed by its March 15 deadline, the company said.
“These latest issues have further delayed the filing of timely financial statements and could hinder Goodyear's access to credit facilities and external capital markets,” Fitch said in a statement. “Access to significant external capital is required in order to meet heavy debt maturities, pension funding requirements and other cash needs over the next few years. The delays and questions surrounding the company's financial statements have precluded the ability to track the progress of the company's critical cost restructuring program.”
Fitch cited other concerns, including competition, raw materials cost pressures, needed cash in the near term and credit refinancing.
Meanwhile, UBS Investment Research has cut its stock rating on Goodyear from “neutral” to “reduce” in part because of the SEC investigation.