NEW YORK (Feb. 20, 2004) — Moody's Investors Services has lowered its ratings on certain Goodyear secured and unsecured debt instruments and also revised its outlook to “negative.”
The moves follow Goodyear's announcement of its plans for a private placement for about $650 million of senior secured notes with junior liens and recent news of the Securities and Exchange Commission's launch of a formal investigation into last year's restatement. Moody's also confirmed other ratings.
“The new $650 million issue of senior notes, along with a new $650 million asset-based term loan B will enhance the company's overall liquidity, but it will significantly increase the percentage of secured claims in the company's capital structure,” Moody's said in a statement.
Further, the rating agency revised its rating outlook to “negative” because of delays in Goodyear's internal accounting investigation—which has now spread outside of Europe—that have held back financial reports as well. Also, the SEC on Feb. 5 told the company its investigation was issued formal status. These issues lead to a “substantial probability” that Goodyear will not be able to file its 2003 10-K by the March 15 deadline, the tire maker said.
“Moody's is concerned about the timing of the release of more current and audited financial statements, the potential impact on plans to complete Goodyear's refinancing activities, potential for delays in asset sales and prospective requirement for additional technical waivers from its lenders should deadlines for filing audited financial statements be missed,” Moody's said.
On Feb. 13, Fitch Ratings downgraded Goodyear's senior unsecured rating and senior secured bank facilities as a result of the SEC formal investigation.