Federal-Mogul amends, expands its bank credit agreements, loan covenants

NEW YORK (Jan. 3)—Federal-Mogul Corp. has amended and expanded its bank credit agreements, the firm said during an investors meeting in New York today. In addition to solidifying approximately $200 million in European financing, Federal-Mogul expanded its current senior credit facility of $1.7 billion by $350 million. The new terms ease the covenant restrictions the manufacturer was bound by, some of which it technically violated at the end of last year, Interim CEO and Chairman Robert S. Miller said. In exchange for the new terms, the supplier granted lenders providing new funds liens on its U.S. property, plant and equipment, inventories, intellectual property and general intangibles and unencumbered accounts receivable. Federal-Mogul granted pre-existing lenders a second security interest in its assets. The new financing provides the seal maker with much needed room to not only deal with its high asbestos liability costs but flexibility to restructure and improve its operations, Miller said.