Goodyear said it will increase capacity of higher margin tires by 40% and capacity at its “low cost plants” by 33%, perhaps building greenfield plants in Eastern Europe and Asia as part of that expansion.
The company said the capacity expansions would “drive the company toward its strategy of having 50% of its global capacity in low-cost countries by 2012.”
Domestically, Goodyear has targeted its Fayetteville, N.C., and Gadsden, Ala., tire plants for increased capacity for higher margin tires. In both cases, Goodyear will also receive “investment incentives” by local and state governments.
In addition, Goodyear will repay its $300 million third lien term loan on Aug. 16. The early repayment will save the company some $26 million in annual interest expenses, $10 million of which will come this year.
The company’s debt repayment plan also includes the early repayment, in the first quarter of 2008, of $650 million in secured notes that are due in 2011. Coupled with the company’s $315 million redemption of senior notes in June, the repayment moves will save Goodyear more than $125 million in annual interest expense.
