The Auto Channel
The Largest Independent Automotive Research Resource
The Largest Independent Automotive Research Resource
Official Website of the New Car Buyer

Goodyear Announces Pricing of Mandatory Convertible Preferred Stock


AKRON, OH--March 29, 2011: The Goodyear Tire & Rubber Company 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.

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:

Goldman, Sachs & Co.

J.P. Morgan Securities LLC

Prospectus Department

c/o Broadridge Financial Solutions

200 West St.

1155 Long Island Ave.

New York, NY 10282

Edgewood, NY 11717

telephone: 866-471-2526

telephone: 866-803-9204

facsimile: 212-902-9316



Credit Agricole Securities (USA) Inc.

Brooklyn Army Terminal

Equity Prospectus

140 58th St., 8th Floor

1301 Avenue of the Americas

Brooklyn, NY 11220

18th Floor

telephone: 800-831-9146

New York, NY 10019

telephone: 212-408-5680

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.