Federal-Mogul Corp. traded up three to four points into the 84-85 context last week after a routine court hearing during which there was said to be a closed door meeting. The topic of the meeting could not be determined, but some market players speculate the company will have news next week and emerge from bankruptcy sooner rather than later. "The company is anticipating a press release in the next week and there will be a filing in the bankruptcy court that will clarify all this," said one source familiar with the case. "It's all in chambers and it's all confidential," said James Zamoyski, senior v.p. and general counsel for Federal-Mogul, in response to a question regarding what was holding up the bankruptcy process. He declined to comment further.
Traders said the name was changing hands in the 84-85 range toward the end of last week, up from the 81-82 context. The name had been trading in the mid-to high 70s for most of the summer and had only recently started to climb up toward the 80s range at the end of September. The company filed for bankruptcy in October 2001 to separate its asbestos liabilities from its operations. But traders explained that the asbestos legislation currently wading through the Senate has little affect on Federal-Mogul because the company has already determined that it would place 50.1% of the common stock in the reorganized company in a trust under 524g of the U.S. bankruptcy code for asbestos claimants.
It is unclear what is holding up the bankruptcy court proceedings. In January of this year, Federal-Mogul reached an agreement in principle with its major U.S. creditor constituencies. In April, the company filed its disclosure statement with the bankruptcy court. A company spokesman had told LMW previously that the company was targeting early-to-mid 2004 for emergence, but a spokeswoman did not return calls seeking an update. The company filed for financial restructuring under Chapter 11 in the United States and with the Administration in the United Kingdom.