Federal-Mogul Corp.'s bank debt was a touch stronger last week after the company announced that it is considering a $350 million equity investment from Citigroup Venture Capital Equity Partners. The market was quoted about a 1-11/2 points stronger in the 751/2 761/2 range, according to market players. No trades could be confirmed.
According to a draft of the equity injection proposal filed with the bankruptcy court, the company's pre-petition bank debt holders--with almost $1.6 billion in claims--will receive about 18.8% of their claims through the receipt of $300 million in cash under the plan. Another $978 million of bank debt, or about 61.2%, will be exchanged for a combination of $228 million in senior debt and $750 million in subordinated high-yield notes.
Under a previous Federal-Mogul reorganization plan, bank debt holders were slated to receive $1.3 billion in six-and-a-half year senior secured term loans and $300 million in 11-year junior secured paid-in-kind notes. Michael Lynch, Federal-Mogul's executive v.p. and cfo, was out of the office and could not be reached for comment. A Federal-Mogul spokesperson and counsel representing the lenders did not return calls.