Large pieces of Federal-Mogul's "B" tranche traded several times last week, totaling $30 million and going as high as 65, dealers said. About two weeks ago, the company was tossed a lifeline by J.P. Morgan Chase, which threw in $550 million to help pay for asbestos liability claims. Market watchers are reserved on whether the money will help the company in the long run. "The outlook is not necessarily brighter," said a dealer. "Fed-Mogul needed money and time, and they got it from the banks because the debt was unsecured. Now it's on the backs of management to improve the margins in a bad market for cars. They have a very steep road ahead of them." A dealer involved in the trades believes the paper will continue to trade up. A spokeswoman for Morgan Chase declined to comment. A Federal-Mogul spokeswoman did not return calls. The additional money restructured the deal, which had been pari passu, and now puts the $550 million as number one, the pre-existing bank debt as two, and the bonds as three (LMW, 1/8). The deal was originally structured as a $400 million revolver, a $600 million term loan "A" and a $400 million "B" term loan.
Chunks Of Federal-Mogul Move