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Goodyear Tire (GT) Offers Unsecured Senior Notes Worth $700M

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The Goodyear Tire & Rubber Company (GT - Free Report) has announced a public offering of $700 million aggregate principal amount of 10-year senior notes. The notes will be senior unsecure obligations of the company.

Goodyear Tire has offered the notes at a price of 100% of the principal amount and will bear an interest rate of 4.875% per annum. The company expects the offering to close on Mar 7, subject to market and other customary closing conditions.

Proceeds from the offering, along with cash, are to be used by Goodyear Tire to repay 7.0% senior notes of $700 million aggregate principal amount due 2022.

The joint book-running managers of the offering include J.P. Morgan Securities, Deutsche Bank Securities, Barclays Capital, HSBC Securities, BNP Paribas Securities, Credit Agricole Securities, Goldman Sachs, Merrill Lynch, Citigroup Global Markets, Pierce, Fenner & Smith and Wells Fargo Securities. Co-managers of the offering are BB Securities, MUFG Securities Americas, Natixis Securities Americas, UniCredit Capital Markets, Capital One Securities, Regions Securities and The Huntington Investment Company.

In fourth-quarter 2016, Goodyear Tire reported a 2.2% increase in adjusted earnings per share to 95 cents, surpassing the Zacks Consensus Estimate of 87 cents. However, revenues in the quarter fell 7.9% year over year to $3.74 billion, missing the expectation of $3.84 billion. The year-over-year decline in the top line can be attributed to deconsolidation of the company’s subsidiary in Venezuela.

Goodyear Tire’s cash and cash equivalents were $1.1 billion as of Dec 31, 2016, down from $1.48 billion as of Dec 31, 2015. Long-term debt and capital leases amounted to $5.23 billion as of Dec 31, 2016, down from $5.66 billion as of Dec 31, 2015.

Goodyear outperformed the Zacks categorized Rubber-Tires industry over the last three months. The company’s shares gained 18.6% over this period compared with a 16.7% rise recorded by the industry. Better-than-expected earnings in the last reported quarter also supported share performance.

 

Zacks Rank & Key Picks

Goodyear Tire currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies in the auto space include Honda Motor Co., Ltd. (HMC - Free Report) , Fiat Chrysler Automobiles N.V. and Renault SA (RNLSY - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Honda has an expected long-term growth rate of 26%.

Fiat has an expected long-term growth rate of 21.7%.

Renault has an expected long-term growth rate of 4.6%.

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