Federal-Mogul shareholders to get warrants in amended reorganization plan

By Jeff Pines

Washington, March 5 - Federal-Mogul Corp. common shareholders will get an as yet-to-be determined number of common shares under the company's first amended reorganization plan, filed along with an amended disclosure statement in the U.S. Bankruptcy Court for the District of Delaware.

The warrants are the major change in the plan other than technical language changes made, a Federal-Mogul spokeswoman said.

The plan, filed March 5, was developed by the company, the unsecured creditors committee and the asbestos claimants committee, the Southfield, Mich. auto parts manufacturer said. It also has the support of High River LP, which is affiliated with investor Carl Icahn, who is a creditor and a shareholder.

The plan is based on a compromise between the unsecured creditors committee and the asbestos claimants committee, the company said.

Other than those who are estimated to recover 100%, the statement does not provide estimated recoveries. The company will provide additional information before the disclosure hearing, the Federal-Mogul spokeswoman said.

There are a total of about 10,600 claims against the company and its subsidiaries totaling $158.5 billion. Federal-Mogul believes many of these claims are duplicative. There are, according to the company, about 100 bank and noteholder claims valued at $7.1 billion, but the company's records show liabilities of $4.2 billion. It believes any claim over $4.2 billion is duplicative.

According to the plan, holders of note claims and personal injury claims on account of asbestos exposure will receive the common stock of the reorganized company and nothing else.

The noteholders will get 49.9% of the common stock and a trust will be created for the benefit of the personal injury claimants. The trust will hold 50.1% of the reorganized company's common stock.

In addition, the trust will receive certain rights relating to asbestos insurance policies and asbestos insurance action recoveries.

Administrative claimants will recover 100% of their claims as will priority tax claims, priority claims against U.S. debtors, priority claims and preferential liabilities against United Kingdom debtors, secured claims, environmental claims, non-priority employee benefit claims, bonded claims, affiliate claims against U.K. debtors other than Federal-Mogul United Kingdom Ltd. and equity interests in the subsidiaries.

To repay its pre-petition bank lenders, which have nearly $2 billion in claims, the company will obtain a secured term loan agreement of $1.305 billion, issue $300 million of junior payment-in-kind notes with an 11-year maturity. About $328 million will be either refinanced as part of the exit facilities or will become a senior tranche of a new $1.3 billion secured credit facility.

A hearing on the disclosure statement is scheduled for April 13-14.

Federal-Mogul filed for Chapter 11 on Oct. 1, 2001. Its Chapter 11 case number is 01-10578.

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