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Citicorp offers $350 million investment in Federal-Mogul

Citigroup Venture Capital Equity Partners has expressed an interest in investing $350 million in a stake in Federal-Mogul – which the Federal-Mogul board has welcomed.

As a condition to proceeding with such an investment, CVC has requested that Federal-Mogul agree to an exclusive 90-day negotiating period with CVC and to reimburse CVC for necessary fees and expenses incurred by it in connection with the due diligence review of the company's business and negotiation of the possible investment.

In a motion filed with the court today, Federal-Mogul asked the court to approve such exclusive 90-day negotiating period with CVC, and to authorize Federal-Mogul to reimburse CVC for such necessary fees and expenses.

Chip McClure, Federal-Mogul CEO and president, said, "An investment of the type CVC is proposing would create value for the long term by strengthening the balance sheet and enhancing liquidity, while helping ensure that we will continue to deliver innovative products and services to our customers."

In its court filing, Federal-Mogul cited a number of factors, including sustained weakness in the US economy and automotive industry, which it believes could affect its future performance and thus make it advisable to consider an additional investment.

On October 1, 2001, Federal-Mogul decided to separate its asbestos liabilities from its true operating potential by voluntarily filing for financial restructuring under Chapter 11 of the Bankruptcy Code in the US and Administration arrangements in the UK.

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