Just as the Firestone Tire & Rubber Co. intensified its efforts to reach a settlement with the federal government over a possible recall of millions of tires, the financial community has dealt the tire maker another blow.
Standard & Poor's Corp., a financial rating service, has lowered its ratings of Firestone senior debentures and notes to a minus from a plus, and at the same time lowered ratings on Firestone's commercial paper from A1 to A2.
Standard & Poor's action is likely to result in higher interest costs and increased difficulties for Firestone if it needs to raise capital. It also makes Firestone bonds and notes less attractive to investors.
Tr add one
Meanwhile, negotiations reportedly have intensified between the government and Firestone over the possibility of the company instituting a voluntary recall of millions of Firestone 500 steel-belted radial tires. A federal agency and congressional committee claim the tires have a safety defect, that has caused huge numbers of failures.
Firestone attorney Clark Clifford or his associates have met with National Highway Traffic Safety Administration officials 11 times, with the latest meeting last Friday, according to the NHTSA.
Accordig to sources close to the negotiations, NHSTA has told Firestone since Friday what kind of voluntary recall would be acceptable in lieu of a governmet-ordered action. The tire maker has been told that it must decide this week whether it will initiate such a recall.