CHICAGO -- Goodyear Tire & Rubber Co., facing a formal U.S. Securities and Exchange Commission investigation into its planned restatement of prior financial results, on Thursday said it plans to privately sell about $650 million of senior secured notes.
The No. 1 North American tiremaker said the notes will be in addition to a $650 million term loan it had previously announced.
Proceeds will be used to prepay a $538 million U.S. term loan due in 2005, pay down other debt and for general corporate purposes.
Analysts said a private placement, which generally involves institutional investors, will allow Goodyear to raise money before the SEC investigation and its own internal probe of overseas accounting procedures are complete.
"The overall threshold for disclosure is a lot less stringent when you're going through a private placement like they've announced," said Scott Lee, an analyst with Fitch Ratings.
Akron, Ohio-based Goodyear declined to say when it might complete the term loan or the notes. It expects the new notes to be secured by junior liens on some collateral that backs its senior secured U.S. credit facilities.
The company and its largest union, the United Steelworkers of America, declined to comment on whether the note sale would fulfill the terms of their three-year labor contract.
That agreement called for Goodyear to sell $250 million in debt and $75 million in equity by the end of 2003. Goodyear was unable to meet that deadline because it discovered accounting problems at its European business unit.
The company on Wednesday said it had expanded the investigation to other overseas operations and will likely delay filing of its 2003 annual financial statement as a result.
Goodyear lost more than $1 billion in 2001 and 2002 and is expected to post a 2003 loss.