AKRON (Dec. 7, 2007) — Goodyear has completed a stock-for-notes exchange offer, issuing 28.7 million shares of stock to investors who cashed in their 4 percent convertible senior notes.
The exchange deal, which ended Dec. 5, allows the Akron-based tire maker to eliminate about $346 million in debt from its balance sheet and will reduce the company's annual interest expense by about $14 million, according to W. Mark Schmitz, executive vice president and CFO.
“This exchange is another step in our debt reduction process and helps us move closer to our next stage metrics,” Mr. Schmitz said.
The exchange offer, issued Nov. 30, was about 99-percent successful, Goodyear said. The notes tendered were due June 15, 2034. They originally were offered for sale in August 2005.
To entice the note owners to exchange, Goodyear offered 83.0703 shares of common stock, a cash payment of $48.30 and accrued and unpaid interest to, but excluding, the exchange date for every $1,000 of notes. The latter amounted to approximately $19.44 payable in cash.
The exchange offer amounted to the note owners' getting Goodyear shares for $12.04 per share vs. the prevailing market value of about $28.24 per share.
In all, Goodyear paid about $23 million in cash to effect the exchange.