Federal-Mogul Corp.'s bank debt continued its climb last week after the company announced it reached an agreement with its constituencies on an amended plan of reorganization. The bank debt actively traded in the 86-87 range, up from the 84-85 context where the name had jumped two weeks ago following post-hearing buzz (LMW, 11/4). The parties in agreement include Federal-Mogul's unsecured creditors committee, the asbestos claimants committee, the future asbestos claimants representative, the agent for the prepetition bank lenders and the equity committee.
The terms of the amended plan are consistent with the principal terms filed in March. There was no real change in the recovery package going to lenders, and Federal-Mogul is not expected to emerge any sooner. But traders explained that the bank debt ticked up because the plan between the parties is a consensual one. Lenders are slated to receive a recovery package including a term loan, which is valued at approximately 81 cents on the dollar, and paid-in-kind notes with an ultimate value estimated to be about 19 cents on the dollar. Whether the bank debt will keep moving up toward par remains to be seen.
Federal-Mogul's period of exclusivity ran out on Oct. 1, allowing the committees or other parties to file alternative plans of reorganization. The parties are now working to complete the documentation for the plan of reorganization and disclosure statement. There is a hearing to approve the disclosure statement set before the end of the year and Federal-Mogul is targeting a mid-2004 emergence. Calls to a company spokeswoman were not returned.