Fitch Affirms & Removes Tenneco From Rating Watch Positive

NEW YORK--May 2, 20045, 2004--Fitch Ratings has affirmed and removed from Rating Watch Positive Tenneco Automotive's (Tenneco) 'B+' senior secured bank facility, 'B' senior secured notes and 'B-' senior subordinated notes debt ratings. The Rating Outlook is now Stable for Tenecco. The action follows Tenecco's announcement this morning that the planned equity offering is withdrawn.

Due to the volatility in the markets and the immediate impact on the equity price, Tenneco decided not to proceed with an equity offering of up to $150 million that was to have been used to pay down debt, reduce leverage and reduce interest expense. As a result of the cancelled equity offering, Tenneco is also withdrawing the tender offer for its outstanding 11 5/8% senior subordinated notes.

These developments do not affect Tenneco's operating performance or its good liquidity position. At March 31, 2004, Tenneco had $337 million of availability in revolving credit lines and L/C facility, in addition to $149 million of cash on hand.

Operationally, Tenneco has performed well for the full year 2003 and into the first quarter of 2004. Overcoming slightly weak build rate environment in North America, Tenecco achieved stable sales and profitability through its favorable platform exposure, growing business with transplant OEMs, and continued cost reduction efforts.

After a long steady decline, North American aftermarket operations posted a 13% increase in sales for the first quarter 2004. This increase largely reflects the addition of the Pep Boy's account and new product additions in car care products. Notably, however, the long standing sales slide in aftermarket exhaust products which principally accounted for the overall segment's sales slide was stemmed in the first quarter. North American aftermarket exhaust sales were up 2% for the quarter. While a bit premature to say definitively, the weakness in aftermarket exhaust sales which resulted from the stainless steel conversion dynamic may have finally played out.

European EBIT contribution lagged in the first quarter due to the continued decline in the aftermarkets operation. European aftermarkets exhaust is three to four years behind North America in the stainless steel conversion dynamic. While Fitch expects that this will continue to dampen overall European EBIT contributions, better performance in the original equipment operations during the balance of the year is expected to improve European EBIT performance.

Long inventory currently at the Big Three potentially spilling over into production cuts and high fuel prices altering consumer preferences significantly away from light trucks are concerns. Although Tenneco has a relatively good mix of revenue diversity, it is still largely exposed to the Big Three and the light truck platforms in particular.

Overall, Fitch expects Tenneco to be able to generate a moderate level of free cash flow to continue paying down debt.

Tenneco Automotive Inc., headquartered in Lake Forest, Illinois, is a leading global producer of ride control and emissions/exhaust components, modules and systems for both the OEM and the aftermarket. About 75% of its revenues come from the OEM market and 25% is derived from the aftermarket. Geographically, 50% of revenue is from North America, 38% in Europe, 12% from rest of the world.