NEW YORK, March 26 (Reuters) - Standard & Poor's on Monday changed its outlook on Goodyear Tire & Rubber Co. to positive from stable, citing the company's announcement that it will use some proceeds of an asset sale to pay down debt.
Goodyear said late on Friday it plans to sell its engineered products unit to private equity firm Carlyle Group for $1.475 billion, and will use the proceeds from the sale to reduce debt and address benefit costs. For details, see [ID:nN23311981].
The sale is subject to conditions that include regulatory approvals and Carlyle reaching a labor agreement with the United Steelworkers and other conditions, Goodyear said.
"Goodyear's financial profile will improve from debt reduction, and a modest upgrade could occur if profitability and cash generation in the company's North American tire business strengthens," S&P said in a statement.
A positive outlook indicates Goodyear's debt rating is likely to be raised over the next two years. S&P awards Goodyear a corporate credit rating of "B-plus," four levels below investment grade.
Goodyear's 9 percent bond due 2015 rose three quarters of a cent to 110 cents on the dollar on Monday, according to MarketAxess.