Bloomberg News

Icahn’s Federal-Mogul Said to Propose Rate on $1.75 Billion Loan

June 11, 2013

Federal-Mogul Corp. (FDML:US), the auto-parts supplier controlled by billionaire Carl Icahn, proposed the rate on a $1.75 billion term loan it’s seeking to refinance debt, according to a person with knowledge of the transaction.

The seven-year loan will pay interest at 3.5 percentage points to 3.75 percentage points more than the London interbank offered rate, with a 1 percent minimum on the lending benchmark, said the person, who asked not to be identified because the deal is private.

The debt is covenant-light, which means it doesn’t carry typical lender protection provisions such as financial maintenance requirements, and may be sold to investors at a discount of 99.5 cents on the dollar, the person said.

The deal, being arranged by Citigroup Inc., would allow the company to seek an additional $500 million of credit so long as the ratio of debt to earnings before interest, taxes, depreciation and amortization remains at or below 2.75 times, the person said.

Investors would have 101 soft-call protection for the first six months, the person said, meaning Federal-Mogul would have to pay a one-cent premium to reprice the debt in that period.

To contact the reporter on this story: Christine Idzelis in New York at cidzelis@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net


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Companies Mentioned

  • FDML
    (Federal-Mogul Holdings Corp)
    • $16.25 USD
    • 0.26
    • 1.6%
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