Federal-Mogul Reaches Agreement in Principle With All Major U.S. Creditor Constituencies

    SOUTHFIELD, Mich., Jan. 31 -- Federal-Mogul Corporation (OTC Bulletin Board: FDMLQ) today announced it has
reached an agreement in principle with its major U.S. creditor constituencies
to the terms of a consensual plan of reorganization.  The Official Committee
of Unsecured Creditors, the Official Committee of Asbestos Claimants, the
Steering Committee of Pre-Petition Lenders, Icahn Associates (holder of a
significant portion of the company's debt securities) and the Futures
Representative have all agreed to the principal terms of a plan to reorganize
the Company and emerge from Chapter 11 free of asbestos liabilities, with a
de-leveraged balance sheet and a much stronger company.  The agreement in
principle is subject to Bankruptcy Court approval and certain other terms and
conditions.
    The company and its U.S. creditor constituencies expect to file a joint
consensual plan of reorganization with the U.S. Bankruptcy Court by the end of
the company's current exclusivity period in early March 2003.  The agreement
in principle contemplates, among other things, that noteholders and asbestos
claimants will convert all claims, which total in the billions, into equity in
the reorganized company.  Specifically, 49.9% of the new common stock will be
distributed to noteholders and 50.1% will be distributed to a trust
established pursuant to Section 524(g) of the Bankruptcy Code for the benefit
of existing and future asbestos claimants.  U.S. trade creditors are expected
to receive one or more cash distributions under the plan.  The approximately
$1.6 billion in claims of the Pre-Petition Senior Secured Lenders will be
restructured into a combination of 6.5-year maturity Senior Secured Term Loans
and 11-year maturity Junior Secured PIK Notes.
    Federal-Mogul Chairman and Chief Executive Officer Frank Macher said: "We
are very pleased to announce that we reached this important agreement and
expect that we will emerge from Chapter 11 later this year with a much
stronger balance sheet and with a full resolution of the company's asbestos
liability issues.  This agreement, combined with our recently announced letter
of intent to acquire Honeywell's Bendix friction materials business, should
position the company to be an even stronger and more competitive global
supplier to the automotive industry.  The plan will eliminate over $2.5
billion of interest-bearing indebtedness, remove the taint of asbestos
liabilities from the company, and give customers, suppliers and other
stakeholders the confidence they need in the long-term health and success of
Federal-Mogul."
    Federal-Mogul is a global supplier of automotive components and sub-
systems serving the world's original equipment manufacturers and the
aftermarket.  The company utilizes its engineering and materials expertise,
proprietary technology, manufacturing skill, distribution flexibility and
marketing power to deliver products, brands and services of value to its
customers.  Federal-Mogul is focused on the globalization of its teams,
products and processes to bring greater opportunities for its customers and
employees, and value to its constituents.  Headquartered in Southfield,
Michigan, Federal-Mogul was founded in Detroit in 1899 and today employs
49,000 people in 24 countries.  For more information on Federal-Mogul, visit
the company's web site at http://www.federal-mogul.com .

    This release contains forward-looking statements as defined in Section 21E
of the Securities Exchange Act of 1934, including statements about future
business operations, financial performance and market conditions.  Such
forward-looking statements involve risks and uncertainties inherent in
business forecasts as further described in our filings under the Securities
Exchange Act.