In Need of Cash, Goodyear to Sell $650 Million in Bonds

A day after Goodyear announced that an informal SEC probe into accounting irregularities within the company had turned formal, the tire-maker also said it plans to sell $650 million in bonds through a private offering in what some say is a desperate attempt to raise cash.

Goodyear is apparently in dire need of new financing, according to the Wall Street Journal, which reported the company has $1.9 billion in debt that will mature next year with another $1.3 billion maturing in 2006. The company will most likely replace most of that with longer-term debt to better position it to get its financial house in order.

Goodyear, based in Akron, Ohio, told the Journal that the $650 million in bonds is separate from a new $650 million term load the company is finalizing with banks, the Journal reported, adding that the company said it will use proceeds from the bond offering to prepay its existing U.S. term-loan facility, to reduce a portion of the commitments under its U.S. revolving credit facility and to prepay other debts.

"This is part of the financial side of our turnaround plan," Goodyear spokesman Keith Price told the Journal.

Goodyear announced a five-and-one-half year restatement of its earnings in October. The restatement announcement has spawned 32 related lawsuits.

Goodyear disclosed in a federal filing last week that the Securities and Exchange Commission switched its probe of the accounting irregularities that led to the restatement from informal to formal and added that the company’s oversees operations were also under investigation, the Journal reported.

You may like these other stories...

By Jason Bramwell The board of trustees of the Financial Accounting Foundation (FAF) finalized a new policy on November 19 that provides the Governmental Accounting Standards Board (GASB) with direction on what...
By Jason Bramwell The Governmental Accounting Standards Board (GASB) is now offering a free online toolkit designed to assist preparers and auditors of state and local government pension plans with implementing new...
By Steven Brenner With the news that the Financial Accounting Standards Board (FASB) – in conjunction with the International Accounting Standards Board (IASB) – intends to formally move...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.