Federal-Mogul Corp., the auto-parts supplier controlled by billionaire Carl Icahn, will host a call with lenders on Dec. 5 at 10 a.m. in New York to discuss an amendment to its credit pact, according to a person with knowledge of the deal, who asked not to be identified because it’s private.
JPMorgan Chase & Co. and Wells Fargo & Co. are arranging the transaction, which will extend maturities on a $1.8 billion term loan to 2016 from 2014, the company said in a statement today.
Its revolving asset-based credit, to which the banks have agreed to commit an additional $125 million, will be extended to 2017 from 2013, according to the Southfield, Michigan-based company.
As part of the refinancing, Federal-Mogul will issue $150 million of common stock to a subsidiary of Icahn Enterprises LP according to the statement. The transaction requires the company to prepay as much as $300 million of the extended term loans.
Federal-Mogul obtained the original debt when it exited from bankruptcy in 2007, according to data compiled by Bloomberg. The $540 million revolving credit line initially paid interest at 1.75 percentage points more than the London interbank offered rate, while the term B portion initially paid interest at 1.94 percentage points more than Libor, Bloomberg data show. It also has about $953 million of debt under a term C slice, the data show.
In a revolving line of credit, money can be borrowed again once it’s repaid; in a term loan it can’t.