Deutsche Bank Comments On Goodyear's Convertible Preferred Stock Offering

Goodyear GT announced a $500MM mandatory convertible preferred stock offering. Net proceeds for the company are projected at $484MM, of which $387 MM will be used to claw back some of the company's 10.5% notes. Deutsche Bank assumes that the remaining $97 MM will be used to further reduce debt/pension. These actions should result in annual interest/pension savings of approximately $44MM. Deutsche Bank believes that this deal should significantly reduces speculation regarding the potential for near term equity issuances, which it believes represented an overhang for the stock. Deutsche Bank has a Buy rating and $21 PT on GT GT closed Monday at $15.45