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January 8, 2008 |
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FEDERAL-MOGUL: S&P Puts BB- Rating on US$2.96 Bln Senior Loan Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Southfield, Michigan-based Federal-Mogul Corp. following the company's emergence from Chapter 11 on Dec. 27, 2007. The outlook is stable. Standard & Poor's also assigned Federal-Mogul's US$540 million asset-based revolving credit facility due 2013 a 'BB+' rating (two notches higher than the corporate credit rating) with a recovery rating of '1', indicating an expectation for very high (90%-100%) recovery in the event of a payment default. Standard & Poor's assigned Federal-Mogul's US$2.96 billion senior secured term loan a 'BB-' bank loan rating (the same level as the corporate credit rating) with a recovery rating of '4', indicating an expectation for average (30%-50%) recovery. The term loan consists of a US$1 billion eight-year facility and a US$1.96 billion seven-year facility. Of the total term loan, US$878 million was drawn at closing and the balance was drawn on Jan. 3, 2008. "The corporate credit rating reflects Federal-Mogul's weak business profile and high leverage, but also its adequate liquidity," said Standard & Poor's credit analyst Nancy Messer. These ratings are consistent with our report published Nov. 28, 2007, in which S&P detailed the ratings it expected to assign to Federal-Mogul upon emergence. Federal-Mogul has about US$3.1 billion of total balance-sheet debt outstanding following emergence from bankruptcy, with the senior secured term loan fully drawn and applied toward refinancing other debt incurred as part of the plan of reorganization. Downside ratings risk is mitigated by S&P's expectation of continued modest sales and EBITDA expansion and of positive free cash flow that could allow for reduced leverage in the near term. Also limiting downside risk is Standard & Poor's expectation that the effect of restructuring activities will produce improved EBITDA margin in 2008-2009. Federal-Mogul's diverse end-market, product portfolio, and customer base also provide ratings support. Federal-Mogul Corporation -- http://www.federal-mogul.com/ -- (OTCBB: FDMLQ) is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, Mexico, Malaysia, Australia, Belgium, China, India, Japan, Korea, Poland, Thailand, United Kingdom, among others. |
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