Reserve Primary Fund Sends Goodyear Scrambling for Cash

Stuck in the troubled fund, company taps credit line of $600 million.

By SHARE

It's not just small investors who have their money locked up in the Reserve Primary Fund, which broke the buck last week when its net asset value dropped to 97 cents a share. Goodyear Tire & Rubber Co. (symbol GT) said in a press release Thursday that it will draw $600 million from its credit lines because it can't access more than half of its cash investments, which are tied up in the fund, reports Dow Jones. The Reserve Primary halted redemptions on September 16.

Although the company has been trying to pull its $360 million out of the Reserve Primary, the fund has delayed acting on Goodyear's request "because federal regulators have called for an orderly disposition of the fund's securities," says the WSJ. Goodyear says it's going to use the $600 million credit to support seasonal needs and enhance its cash liquidity (it maintains that its other cash investments are still accessible.)

Shares of Goodyear aren't in good shape. They've fallen from $30 at the end of September 2007 to just $16 at yesterday's close.

TAGS:
credit

You Might Also Like