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Goodyear Tire & Rubber Co. this week is moving ahead with the sale of its rubber chemicals business, despite receiving conditional and underwhelming offers, sources said.
One of the world's largest tire companies, Akron, Ohio-based Goodyear has been suffering from operational and financial problems, including lost market share and rising raw material prices. The chemicals business, which makes the compounds used in manufacturing tires, is seen as one of the only noncore assets Goodyear can sell to raise cash.
But bidders are expressing nervousness about buying the division, which generates more than half its revenue by selling its wares to Goodyear. The suitors, primarily financial buyers, want a long-term supply contract with Goodyear, yet that contract would likely be tossed if Goodyear filed for bankruptcy, sources said.
Goodyear needs to make a $2.045 billion debt payment by April 2005, and a $1.3 billion payment in March 2006. But the company only generated $166 million in free cash flow in 2002, according to a May 1 Deutsche Bank analyst...