Federal-Mogul Holdings LLC#s Proposed Senior Secured Euro Notes Rated #B-# (Recovery Rating: #4#)

Stocks and Financial Services Press Releases Monday March 20, 2017 17:42
NEW YORK--20 Mar--S&P Global Ratings

NEW YORK (S&P Global Ratings) March 20, 2017--S&P Global Ratings today assigned its 'B-' issue-level rating and '4' recovery rating to Michigan-based Federal-Mogul Holdings LLC's proposed €715 million senior secured notes. The notes will be issued in two tranches, with one tranche of fixed-rate notes due 2022 and one tranche of floating-rate notes due 2024. The '4' recovery rating indicates our expectation for average (30%-50%; rounded estimate: 35%) recovery for secured lenders in the event of a payment default.

The company plans to use the proceeds from the bond offering to fully repay its tranche B term loan due 2018 and repay about $70 million of borrowings under its unrated asset-based revolving credit facility.
The proposed notes will rank pari passu in right of payment with all of Federal Mogul's existing and future senior indebtedness and will have access to the same collateral as the company's term loan facility.

All of our other ratings on Federal Mogul, including our 'B-' corporate credit rating, remain unchanged. We expect that the company's gross margins will remain stable at 20% or better and anticipate that its free operating cash flow will stay positive in 2017.

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