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Federal-Mogul Successfully Amends and Expands Bank Credit Agreement

3 January 2001

Federal-Mogul Successfully Amends and Expands Bank Credit Agreement

    SOUTHFIELD, Mich., Jan. 3 Federal-Mogul Corporation announced the successful completion of
its Fourth Amended and Restated Credit Agreement, which provides $350 million
in additional financing to its pre-existing $1.7 billion senior credit
facilities.  Federal-Mogul has also solidified its European financing with
committed lines targeted to approximately $200 million.
    "We are very pleased to expand our credit lines by $550 million in a very
difficult market," said Robert S. (Steve) Miller, chairman and chief executive
officer.  "With the new agreement, we have significantly increased our
financial flexibility and eased the covenant restrictions on our existing
credit facilities.  The covenant relief should provide great assurance for our
customers, creditors and employees as it allows Federal-Mogul to continue its
preeminent role in providing customer solutions."
    The amended and restated credit facility provides for a $200 million
supplemental revolving credit line and a $150 million term loan.  The senior
lenders, led by JP Morgan Chase as arranger, agreed to loosen the financial
covenant ratios beginning in the fourth quarter of 2000.  The company retained
the ability to reinvest $500 million of the first $700 million in net proceeds
from asset sales.  Federal-Mogul agreed to grant to the lenders providing new
funds a first priority security interest in its U.S. property, plant and
equipment; inventories; intellectual property and general intangibles; and
unencumbered accounts receivable.  Pre-existing lenders were given a second
security interest in these assets.
    The pricing on the pre-existing $1.7 billion facility was increased by 50
basis points.  Pricing on the supplemental revolving credit line is LIBOR plus
300 basis points, and the new term loan is priced at LIBOR plus 375 basis
points.  The amended and restated credit facility expires in February, 2004.
    "We have been able to provide ourselves with financial flexibility for the
intermediate term," said Miller.  "We have bought ourselves some time.  We can
now focus on implementing our six global initiatives for operational
improvement while working toward a more successful litigation environment or a
legislative solution for our continuing asbestos situation."