Goodyear Announces Pricing of Mandatory Convertible Preferred Stock

AKRON, Ohio, March 29, 2011 /PRNewswire/ -- The Goodyear Tire & Rubber Company (NYSE: GT) today announced that its public offering of 8.7 million shares of its mandatory convertible preferred stock was priced at $50 per share.  In addition, the underwriters have an option to purchase up to an additional 1.3 million shares of mandatory convertible preferred stock.  The offering is expected to close on March 31, 2011, subject to customary closing conditions.

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Unless converted earlier, shares of the mandatory convertible preferred stock will convert automatically on April 1, 2014 into between approximately 23.9 million and 29.9 million shares of Goodyear common stock (subject to customary anti-dilution adjustments and assuming that the underwriters do not exercise their option to purchase additional shares), depending on the market value of Goodyear common stock on that date.  

The mandatory convertible preferred stock will pay, when and if declared by the Board of Directors, cumulative dividends at a rate of 5.875% per annum on the initial liquidation preference of $50 per share (equivalent to $2.94 per year per share), payable quarterly in cash on January 1, April 1, July 1 and October 1 of each year.  The first dividend payment date will be July 1, 2011.  Net proceeds from this offering, after deducting underwriting discounts and commissions and offering expenses, are expected to be approximately $421 million.  Net proceeds are expected to be approximately $484 million if the underwriters exercise their option to purchase additional shares in full.

Goodyear intends to use the net proceeds from the offering to redeem $350 million in principal amount of its outstanding 10.500% senior notes due May 15, 2016 at the redemption price of 110.500% of the principal amount plus accrued and unpaid interest to the redemption date.  This redemption is pursuant to provisions of the notes that allow the company, at its option, to redeem up to 35 percent of the original principal amount with proceeds from one or more equity offerings.  The company intends to use the remaining net proceeds from this offering for general corporate purposes, which may include the repayment of other outstanding indebtedness.  

Goldman, Sachs & Co., J.P. Morgan Securities LLC, Citi and Credit Agricole Securities (USA) Inc. are acting as joint book-running managers for the offering.

The offering is being made under an effective shelf registration statement filed with the U.S. Securities and Exchange Commission.  This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.  Any offers of the securities will be made exclusively by means of a prospectus supplement and accompanying prospectus.  Copies of the prospectus and the prospectus supplement relating to the offering may be obtained from:

Goodyear is one of the world's largest tire companies. It employs approximately 72,000 people and manufactures its products in 56 facilities in 22 countries around the world.

Certain information contained in this press release may constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. There are a variety of factors, many of which are beyond our control, that affect our operations, performance, business strategy and results and could cause our actual results and experience to differ materially from the assumptions, expectations and objectives expressed in any forward-looking statements. These factors include, but are not limited to:  our ability to realize anticipated savings and operational benefits from our cost reduction initiatives or to implement successfully other strategic initiatives; increases in the prices paid for raw materials and energy; pension plan funding obligations; actions and initiatives taken by both current and potential competitors; deteriorating economic conditions or an inability to access capital markets; work stoppages, financial difficulties or supply disruptions at our suppliers or customers; the adequacy of our capital expenditures; a labor strike, work stoppage or other similar event; our failure to comply with a material covenant in our debt obligations; potential adverse consequences of litigation involving the company; as well as the effects of more general factors such as changes in general market, economic or political conditions or in legislation, regulation or public policy. Additional factors are discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.

SOURCE The Goodyear Tire & Rubber Company

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