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Filed Pursuant to Rule No. 424(b)(3)
Registration No. 333-81943
PROSPECTUS
$1,000,000,000
[Logo of Federal Mogul]
Offer to Exchange
7 3/8% Notes due 2006
For Any and All Outstanding 7 3/8% Notes due 2006
and
7 1/2% Notes due 2009
For Any and All Outstanding 7 1/2% Notes due 2009
This prospectus (and accompanying letter of transmittal) relates to our
proposed offer to exchange up to $400,000,000 aggregate principal amount of
new 7 3/8% notes due 2006 (the "New 7 3/8% Notes") for any and all outstanding
7 3/8% notes due 2006 and up to $600,000,000 aggregate principal amount of new
7 1/2% notes due 2009 (the "New 7 1/2% Notes" and together with the New 7 3/8%
Notes, the "New Notes"), for any and all outstanding 7 1/2% notes due 2009.
The 7 3/8% notes due 2006 and the 7 1/2% notes due 2009 were issued in a
private offering on January 20, 1999 (the "Old Notes") and have certain
transfer restrictions. The New Notes will be freely transferable.
. The exchange offer expires 5:00 p.m., New York City time, on August 13,
1999, unless extended.
. The terms of the New Notes are substantially identical to the terms of
the Old Notes, except that the New Notes will be freely transferable and
issued free of any covenants regarding exchange and registration rights.
. All Old Notes that are validly tendered and not validly withdrawn will be
exchanged.
. Tenders of Old Notes may be withdrawn at any time prior to expiration of
the exchange offer.
. The exchange of Old Notes for New Notes will not be a taxable event for
United States federal income tax purposes.
. Holders of Old Notes do not have any appraisal or dissenters' rights in
connection with the exchange offer. Old Notes not exchanged in the
exchange offer will remain outstanding and be entitled to the benefits of
the indenture, but, except under certain circumstances, will have no
further exchange or registration rights under the registration rights
agreement.
. ""Affiliates'' of Federal-Mogul (within the meaning of the Securities Act
of 1933) may not participate in the exchange offer.
. All broker-dealers must comply with the registration and prospectus
delivery requirements of the Securities Act of 1933. See "Plan of
Distribution" beginning on page 48.
. We intend to apply for listing of the New Notes on the Luxembourg Stock
Exchange.
---------------
Please see "Risk Factors" beginning on page 10 for a discussion of certain
factors you should consider in connection with the exchange offer.
---------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NEW NOTES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
WE MAY AMEND OR SUPPLEMENT THIS PROSPECTUS FROM TIME TO TIME BY FILING
AMENDMENTS OR SUPPLEMENTS AS REQUIRED. YOU SHOULD READ THIS ENTIRE PROSPECTUS
(AND ACCOMPANYING LETTER OF TRANSMITTAL AND RELATED DOCUMENTS) AND ANY
AMENDMENTS OR SUPPLEMENTS CAREFULLY BEFORE MAKING YOUR INVESTMENT DECISION.
---------------
Our principal executive offices are located at 26555 Northwestern Highway,
Southfield, MI 48034.
Our telephone number is (248) 354-7700.
The date of this prospectus is July 14, 1999.
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TABLE OF CONTENTS
<TABLE>
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Page
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Where You Can Find More Information....................................... 1
Forward-Looking Statements................................................ 2
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 10
Use of Proceeds........................................................... 14
Capitalization............................................................ 15
Selected Consolidated Financial Data...................................... 16
Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.................................... 17
Exchange Offer; Registration Rights....................................... 17
Description of Certain Indebtedness....................................... 28
Description of the New Notes.............................................. 30
Book-Entry; Delivery and Form............................................. 40
Material Federal Tax Considerations....................................... 45
Plan of Distribution...................................................... 48
Incorporation of Information by Reference................................. 49
Legal Matters............................................................. 49
Experts................................................................... 49
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WHERE YOU CAN FIND MORE INFORMATION
As required by the Securities Act of 1933, we have filed a registration
statement (No. 333-81943) relating to the securities offered by this prospectus
with the SEC. This prospectus is a part of that registration statement, which
includes additional information.
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, 7 World Trade Center, Suite 1300, New York, New York 10048 and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. You can also request
copies of the documents, upon payment of a duplicating fee, by writing the
Public Reference Section of the SEC. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. These SEC filings are also
available to the public from the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
the SEC. This permits us to disclose important business and financial
information to you by referencing these filed documents. Any information
referenced this way is considered part of this prospectus, and any information
filed with the SEC subsequent to this prospectus will automatically update and
supersede this information. We incorporate by reference the following
documents, which have been filed with the SEC:
. Annual Report on Form 10-K for the year ended December 31, 1998.
. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
. Federal-Mogul's proxy statement for the 1998 Annual Shareholders'
Meeting, filed on March 24, 1999.
. Current Reports on Form 8-K filed on April 7, 1998 and November 24, 1998.
All documents we file pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this prospectus and before the completion of the
offering of the securities described in this prospectus shall be incorporated
by reference in this prospectus from their date of filing.
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You may request a copy of these filings, at no cost, by writing or
telephoning Federal-Mogul at the following address and telephone number: David
M. Sherbin, Esq., Associate General Counsel and Secretary, Federal-Mogul
Corporation, 26555 Northwestern Highway, Southfield, MI 48034, (248) 354-7700.
In order to obtain timely delivery, you must request the information no later
than five business days before the expiration of the exchange offer.
You should rely only on the information provided in this prospectus, as
well as the information incorporated by reference. We have not authorized
anyone to provide you with different information. We are not making an offer
of these securities in any state where the offer is not permitted. You should
not assume that the information in this prospectus or any documents
incorporated by reference is accurate as of any date other than the date on
the front of the applicable document.
FORWARD-LOOKING STATEMENTS
Some of the statements contained or incorporated in this prospectus and the
documents incorporated by reference herein discuss future expectations,
contain projections of results of operations or financial condition or state
other "forward-looking" information. Forward-looking information in this
prospectus and the documents incorporated by reference herein includes
information regarding:
. plans to integrate the businesses of T&N, Fel-Pro and Cooper Automotive
with our business;
. plans to address computer software issues related to the approach of the
year 2000;
. the scope and effect of T&N's asbestos liability; and
. plans to address the issues related to the conversion to the Euro.
Important factors and risks that may cause actual results to differ from
projections include, for example:
. those relating to the combination of our business with those of T&N, Fel-
Pro and Cooper Automotive;
. the anticipated synergies, cost benefits, operating efficiencies,
restructuring charges and related costs in connection with those
acquisitions;
. conditions in the automotive components industry;
. certain global and regional economic conditions; and
. other factors which may be described in our future filings with the SEC.
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PROSPECTUS SUMMARY
This summary highlights selected information from this prospectus, but does
not contain all information that is important to you. This prospectus includes
specific terms of the exchange offer. We encourage you to read the detailed
information and consolidated financial statements and the notes thereto
appearing elsewhere in this prospectus in their entirety or incorporated herein
by reference. As used in this prospectus, unless the context indicates
otherwise, (1) all references to "Federal-Mogul," "Company," "we," "our,"
"ours," and "us" refer to Federal-Mogul Corporation and its consolidated
subsidiaries and (2) "Notes" means both the Old Notes and the New Notes.
Federal-Mogul Corporation
We are a leading global manufacturer and distributor of a broad range of
components for automobiles and light trucks, heavy duty trucks, farm and
construction vehicles and industrial products. These components include:
. powertrain systems components which are primarily bearings, rings,
pistons, sintered products and camshafts
. sealing system components which include dynamic seals and gaskets and
. general products which consist primarily of friction products, systems
protection products and wiper products.
We market our products to many of the world's major original equipment
manufacturers. We also manufacture and supply our products and related parts to
the aftermarket relating to each of these categories of equipment.
Founded in 1899, we traditionally focused on the manufacture and
distribution of engine bearings and sealing systems. From 1990 through 1996, we
pursued a strategy of opening retail auto stores in various international
locations. These geographically-dispersed stores proved burdensome to manage
and resulted in substantial operating losses. In the fourth quarter of 1996, we
initiated a change of management, followed by the initiation of a significant
restructuring program designed to refocus our company on our core competencies
of manufacturing, engineering and distribution. As part of this restructuring,
we closed or sold substantially all of our retail operations. Since that time
we have pursued a growth strategy of acquiring complementary manufacturing
companies that enhance our product base, allow for expansion of our global
manufacturing operations and provide opportunities to capitalize on our
aftermarket distribution network and technological resources.
Recent Developments
Acquisitions
In February 1998, we acquired Fel-Pro Incorporated and certain affiliated
entities, which constitute the operating businesses of the Fel-Pro group of
companies, a privately-owned automotive parts manufacturer, for total
consideration of approximately $722 million. Fel-Pro is a premier gasket
manufacturer for the North America aftermarket and original equipment heavy
duty market. We refer to the acquired Fel-Pro entities in this prospectus as
"Fel-Pro".
In connection with our growth strategy, in March 1998 we acquired T&N plc, a
U.K.-based supplier of engine and transmission products, for a total purchase
price of approximately $2.4 billion. T&N plc manufactures and supplies high
technology engineered automotive components and industrial materials including
pistons, friction products, bearings, systems protection, camshafts and sealing
products. We refer to T&N plc in this prospectus as "T&N".
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In October 1998, we acquired Cooper Automotive for an initial purchase price
of $1.9 billion, excluding fees and expenses and excluding a post-closing net
asset adjustment to be finalized in the third quarter of 1999. Cooper
Automotive, comprised of the Cooper Automotive and the Moog divisions of Cooper
Industries, Inc., is a premier provider of leading brand name automotive
products to the aftermarket and original equipment market. Cooper Automotive
manufactures and distributes brake and friction products, chassis parts,
ignition products and lighting and wiper products under well-known brand names
including Champion(R), Moog(R), Abex(R), Wagner(R) and Zanxx(R). Among Cooper
Automotive's largest customers, in alphabetical order, are AutoValue,
DaimlerChrysler, Ford, Fiat, General Motors and NAPA. Cooper Automotive had
revenues in 1997 of $1.9 billion.
In December 1998, we acquired Glockler Dichtsysteme Gunter Hemmrich GmbH, a
German manufacturer of rubber sealing components and acoustic decoupling for
valve covers, intake manifolds and oil pans, with sales of approximately $40
million.
In January 1999, we completed the acquisition of Tri-Way Machine Limited, a
privately-owned manufacturer of machines and machining systems for the world's
metal cutting industry headquartered in Windsor, Ontario, Canada with annual
sales of $35 million.
In January 1999, we completed our acquisition of two camshaft machining
plants from Crane Technologies Group, Inc. to expand the capacity of our
automotive product lines. The two plants located in Orland, Indiana and
Jackson, Michigan have annual sales of approximately $36 million.
In June 1999, we acquired the piston division of Alcan Deutschland GmbH, a
unit of Alcan Aluminum Ltd., with sales of approximately $150 million. Alcan's
piston division manufactures high quality pistons for passenger cars and
commercial vehicles with the DURAL(R) brand name.
Other Activities
In December 1998, we sold T&N's thin wall and dry bearings (polymer
bearings) operations and certain other engine hard part assets to Dana
Corporation for a purchase price of $430 million. Net proceeds to us from the
disposition of the T&N bearings business of approximately $372.0 million were
used to repay bank indebtedness incurred in connection with the acquisition of
Cooper Automotive.
In December 1998, we completed the sale of 14.1 million shares of common
stock. Net proceeds to us from the December equity offering of approximately
$781.2 million were used to repay bank indebtedness incurred in connection with
the acquisition of Cooper Automotive.
In January 1999, we issued $400,000,000 principal amount of 7 3/8% Notes due
2006 and $600,000,000 principal amount of 7 1/2% Notes due 2009. We used the
proceeds of these notes to repay borrowings under our prior senior credit
agreements.
In February 1999, we entered into a new $1.75 billion senior credit
agreement at variable interest rates which contains a $1.0 billion
multicurrency revolving credit facility and two term loan components. The
revolving credit facility has a five-year maturity. The term loan components of
$400 million and $350 million mature in five and six years, respectively. The
proceeds of this senior credit agreement were used to refinance the prior
senior credit agreement entered into in connection with the T&N and Cooper
Automotive acquisitions as well as the $400 million multicurrency revolving
credit facility related to the T&N acquisition.
In February 1999, all outstanding shares of our Series E Stock were
exchanged into shares of our common stock. Each of the 607,745 remaining shares
of the Series E Stock were exchanged into five shares of our common stock.
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Today, we have over 300 locations, across 6 continents, in 24 countries,
with approximately 55,000 employees worldwide. On a pro forma basis adjusted
for the acquisitions of T&N, Fel-Pro and Cooper Automotive and dispositions as
if they had occurred on January 1, 1998, our total sales for 1998 were
approximately $6.4 billion.
Federal-Mogul is a Michigan corporation with its principal executive offices
located at 26555 Northwestern Highway, Southfield, Michigan 48034. Our
telephone number is (248) 354-7700.
Summary of the Exchange Offer
The form and terms of the New Notes will be substantially identical to those
of the Old Notes except that the New Notes will have been registered under the
Securities Act of 1933. Therefore, the New Notes will not be subject to certain
transfer restrictions, registration rights and related liquidated damages
provisions applicable to the Old Notes. We refer to the 7 3/8% Notes due 2006
and the 7 1/2% Notes due 2009 as the "Old Notes" and the new 7 3/8% Notes due
2006 and the new 7 1/2% Notes due 2009 as the "New Notes".
The Exchange Offer............ We are offering to exchange an aggregate of
$400,000,000 principal amount of new 7 3/8%
Notes due January 15, 2006 for $400,000,000 of
outstanding 7 3/8% Notes due January 15, 2006
and an aggregate of $600,000,000 principal
amount of new 7 1/2% Notes due January 15, 2009
for $600,000,000 of outstanding 7 1/2% Notes
due January 15, 2009. You may only exchange Old
Notes in multiples of $1,000 principal amount.
To be exchanged, an Old Note must be properly
tendered and accepted. All outstanding Old
Notes that are validly tendered and not validly
withdrawn will be exchanged for New Notes
issued on or promptly after the expiration date
of the exchange offer.
Currently, there are $400,000,000 principal
amount of old 7 3/8% Notes due 2006 and
$600,000,000 principal amount of old 7 1/2%
Notes due 2009 outstanding and no New Notes
outstanding.
Issuance of the Old Notes;
Registration Rights...........
The Old Notes were issued and sold in a private
offering to Merrill Lynch, Pierce, Fenner &
Smith, Incorporated, Chase Securities Inc.,
Bear, Stearns & Co. Inc., Credit Suisse First
Boston Corporation, Morgan Stanley & Co.
Incorporated, NationsBanc Montgomery Securities
L.L.C., BancBoston Robertson Stephens Inc., BNY
Capital Markets, Inc., Credit Lyonnais
Securities (USA) Inc., Dresdner Kleinwort
Benson North America LLC, First Chicago Capital
Markets, Inc., First Union Capital Markets, a
division of Wheat First Securities Inc., Scotia
Capital Markets (USA) Inc. and SG Cowen
Securities Corporation, as the initial
purchasers on January 20, 1999. In connection
with that sale, we executed and delivered the
Registration Rights Agreement for the benefit
of the noteholders. In the Registration Rights
Agreement, we agreed to either:
. commence an exchange offer under which the
New Notes, registered under the Securities
Act of 1933 with terms substantially
identical to those of the Old Notes, will be
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exchanged for the Old Notes pursuant to an
effective registration statement; or
. cause the Old Notes to be registered under
the Securities Act of 1933 pursuant to a
resale shelf registration statement.
If we do not comply with our obligations under
the Registration Rights Agreement, we will be
required to pay certain liquidated damages that
will be payable twice yearly. For more
information, we refer you to "Exchange Offer;
Registration Rights."
Absence of a Public Market
for the New Notes.............
The New Notes will generally be freely
transferable but will be new securities for
which there will not initially be a market.
Accordingly, there can be no assurance as to
the development or liquidity of any market for
the New Notes.
The initial purchasers have advised us that
they currently intend to make a market in the
New Notes. However, the initial purchasers are
not obligated to do so, and any market-making
with respect to the New Notes may be
discontinued at any time without notice. We do
not intend to apply for listing of the New
Notes on any securities exchange or on any
automated dealer quotation system other than
the Luxembourg Stock Exchange.
Expiration Date............... The exchange offer will expire at 5:00 p.m.,
New York City time, on August 13, 1999, unless
we extend it, in which case the term
"expiration date" shall mean the latest date
and time to which we extend the exchange offer.
Conditions to the Exchange We are not required to consummate the exchange
Offer......................... offer if there is any pending or threatened
action or proceeding that would in our judgment
be reasonably expected to impair our ability to
proceed with the exchange offer. For more
information, we refer you to "Exchange Offer;
Registration Rights--Certain Conditions to the
Exchange Offer." The exchange offer is not
conditioned upon any minimum aggregate
principal amount of Old Notes being tendered
for exchange.
Procedures for Tendering Old If you want to tender your Old Notes in the
Notes......................... exchange offer, you must complete and sign a
letter of transmittal and send it, together
with the Old Notes and any other required
documents, to The Bank of New York, as exchange
agent, in compliance with the procedures for
guaranteed delivery contained in the letter of
transmittal. You must send the letter of
transmittal to the exchange agent prior to 5
p.m. on the expiration date of the exchange
offer. If your Old Notes are registered in the
name of a nominee and you wish to tender your
Old Notes in the exchange offer, you should
instruct your nominee to promptly tender your
Old Notes on your behalf.
Guaranteed Delivery If you wish to tender your Old Notes and:
Procedures....................
. your Old Notes are not immediately available;
or
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. you cannot deliver your Old Notes or any of
the other documents required by the letter of
transmittal to the exchange agent prior to
the expiration date of the exchange offer; or
. you cannot complete the procedure for book-
entry transfer on a timely basis;
you may tender your Old Notes according to the
guaranteed delivery procedures detailed in the
letter of transmittal. For more information, we
refer you to "Exchange Offer; Registration
Rights--Guaranteed Delivery Procedures."
Withdrawal Rights............. You may withdraw the tender of your Old Notes
at any time prior to the expiration date of the
exchange offer. For more information, we refer
you to "Exchange Offer; Registration Rights--
Withdrawal Rights."
Acceptance of the Old Notes
and Delivery of the New
Notes.........................
We will accept for exchange any and all Old
Notes which you properly tender in the exchange
offer prior to the expiration date of the
exchange offer. We will issue and deliver the
New Notes promptly following the expiration
date of the exchange offer. For more
information, we refer you to "Exchange Offer;
Registration Rights--Terms of the Exchange
Offer."
Resales of the New Notes...... We believe, based on an interpretation by the
staff of the SEC contained in no-action letters
issued to third parties, that you may offer to
sell, sell or otherwise transfer the New Notes
issued to you in this exchange offer without
complying with the registration and prospectus
delivery requirements of the Securities Act of
1933, provided that:
. you are not an "affiliate" of ours within the
meaning of Rule 405 under the Securities Act
of 1933; and
. you acquire the New Notes in the ordinary
course of business and you have no
arrangement or understanding with any person
to participate in the distribution of the New
Notes.
If you are a broker-dealer and you receive New
Notes for your own account in exchange for Old
Notes, you must acknowledge that you will
deliver a prospectus if you decide to resell
your New Notes. For more information, we refer
you to "Plan of Distribution."
Consequences of Failure to If you do not exchange your Old Notes for the
Exchange...................... New Notes pursuant to the exchange offer you
will still be subject to the restrictions on
transfer of your Old Notes as contained in the
legend on the Old Notes. In general, you may
not offer to sell or sell the Old Notes, except
pursuant to a registration statement under the
Securities Act of 1933 or any exemption from
registration thereunder and in compliance with
applicable state securities laws.
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Material U.S. Federal Income
Tax Considerations...........
The exchange of Notes will not be a taxable
event for United States federal income tax
purposes. You will not recognize any taxable
gain or loss or any interest income as a result
of the exchange.
Registration Rights The exchange offer is intended to satisfy your
Agreement.................... registration rights under the Registration
Rights Agreement. Those rights will terminate
upon completion of the exchange offer.
Use of Proceeds.............. We will not receive any proceeds from the
issuance of New Notes pursuant to the exchange
offer. In consideration for issuing the New
Notes in exchange for the Old Notes as described
in this prospectus, we will receive, retire and
cancel the Old Notes. For more information, we
refer you to "Use of Proceeds."
Exchange Agent............... The Bank of New York is the exchange agent for
the exchange offer.
Description of the New Notes
New Notes.................... $400,000,000 aggregate principal amount of 7
3/8% Notes due 2006.
$600,000,000 aggregate principal amount of 7
1/2% Notes due 2009.
Maturity..................... The 7 3/8% Notes mature on January 15, 2006.
The 7 1/2% Notes mature on January 15, 2009.
Interest Payment Dates....... January 15 and July 15, commencing on January
15, 2000.
Ranking...................... Except as hereinafter provided, the New Notes
will rank equally in right of payment with all
other unsubordinated, unsecured indebtedness of
Federal-Mogul, and senior in right of payment to
any future subordinated indebtedness of Federal-
Mogul. Indebtedness incurred under our senior
credit agreement and certain other indebtedness
of Federal-Mogul are secured by pledges of all
or a portion of the stock of certain of Federal-
Mogul's subsidiaries and certain intercompany
indebtedness. So long as indebtedness under our
senior credit agreement is secured by such
pledges, existing public indebtedness and the
New Notes will also be secured by such
collateral. Indebtedness incurred under our
senior credit agreement and certain other
indebtedness of Federal-Mogul are also secured
by collateral that does not secure the New
Notes. The indenture for the New Notes will not
contain any restriction upon indebtedness,
whether secured or unsecured, that Federal-Mogul
and its subsidiaries may incur in the future.
Creditors of Federal-Mogul secured by collateral
which does not secure the New Notes will have a
claim on such other collateral prior to any
claims of holders of the New Notes against such
other collateral. For more information, we refer
you to "Description of the New Notes--Ranking."
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Optional Redemption........... We may redeem the New Notes, at our option, at
any time, in whole or in part, at a redemption
price equal to the greater of (i) 100% of the
principal amount of the New Notes of such
series to be redeemed or (ii) the sum of the
present values of the Remaining Scheduled
Payments on the New Notes to be redeemed,
discounted to the date of redemption, on a
semiannual basis, at the Treasury Rate plus 50
basis points, plus, in either case, accrued
interest to the date of redemption. For more
information, we refer you to "Description of
the New Notes--Optional Redemption."
Sinking Fund.................. None.
Certain Covenants............. The indenture governing the New Notes contains
covenants that impose, among other things,
limitations on the creation of liens and
limitations on sale and lease-back
transactions. For more information, we refer
you to "Description of the New Notes--Certain
Covenants."
Guarantees.................... The subsidiary guarantors so long as they
guarantee indebtedness under our senior credit
agreement, will unconditionally guarantee the
New Notes. The subsidiary guarantors have
guaranteed all indebtedness under our senior
credit agreement and all public indebtedness.
For more information, we refer you to
"Description of the New Notes--The Guarantees."
Listing....................... We will apply for listing of the New Notes on
the Luxembourg Stock Exchange.
Risk Factors.................. We refer you to "Risk Factors" for a discussion
of certain factors you should carefully
consider before deciding to invest in the New
Notes.
Certain capitalized terms used in this summary are defined in "Description
of the New Notes" beginning on page 30.
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RISK FACTORS
An investment in the New Notes involves various risks. If you are
considering tendering Old Notes in exchange for New Notes, you should carefully
review the information contained in this prospectus and the documents to which
they refer. You should particularly consider the following factors:
The Old Notes are subject to transfer restrictions and there is a limited
trading market for the Old Notes
We will issue New Notes in exchange for the Old Notes only after the
exchange agent receives tender of your Old Notes. Therefore, you should allow
sufficient time to ensure timely delivery of your Old Notes. Neither the
exchange agent nor we are under any duty to give notification of defects or
irregularities with respect to your tender of the Old Notes for exchange. If
you do not tender your Old Notes, or if you do tender your Old Notes and they
are not accepted, your Old Notes will continue to be subject to the existing
restrictions upon their transfer. Accordingly, after the completion of the
exchange offer, you will only be able to offer for sale, sell or otherwise
transfer untendered Old Notes as follows:
. to Federal-Mogul;
. pursuant to a registration statement that has been declared effective
under the Securities Act of 1933;
. for so long as the Old Notes are eligible for resale pursuant to Rule
144A under the Securities Act of 1933, to a person you reasonably believe
is a qualified institutional buyer ("QIB") within the meaning of Rule
144A, that purchases for its own account or for the account of a QIB to
whom notice is given that the transfer is being made in reliance on the
exemption from the registration requirements of the Securities Act of
1933 provided by Rule 144A;
. pursuant to offers and sales that occur outside the United States to
foreign persons in transactions complying with the provisions of
Regulation S under the Securities Act of 1933;
. to an "Accredited Investor" within the meaning of Rule 501(a)(1), (2),
(3) and (7) under the Securities Act of 1933 that is an institutional
investor (an "Institutional Accredited Investor") purchasing for its own
account or for the account of such an Institutional Accredited Investor,
in each case in a minimum principal amount of the Old Notes of $250,000;
or
. pursuant to any other available exemption from the registration
requirements of the Securities Act of 1933.
To the extent that Old Notes are tendered and accepted in the exchange offer,
the liquidity of the trading market for untendered Old Notes could be adversely
affected. For more information, we refer you to "Exchange Offer; Registration
Rights."
In addition, any holder of the Old Notes who tenders in the exchange offer
for the purpose of participating in a distribution of the New Notes will be
required to comply with the registration and prospectus delivery requirements
of the Securities Act of 1933 in connection with any resale transaction. Each
broker-dealer who receives New Notes for its own account in exchange for the
Old Notes, where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or any other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes. For more information, we refer you to "Plan of Distribution."
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We are substantially leveraged and we may not be able to generate sufficient
cash flow from our operations to service our debt
We incurred a significant amount of debt when we purchased T&N, Fel-Pro and
Cooper Automotive. The following chart contains important financial statistics
as of March 31, 1999:
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Total short-term debt............................... $ 196.1 million
Total long-term debt................................ $3,396.7 million
Total debt.............................................. $3,592.8 million
Company-obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely
convertible subordinated debentures of the Company... $ 575.0 million
Minority interest in consolidated subsidiaries........ $ 36.5 million
Shareholders' equity.................................. $1,888.4 million
----------------
Total capitalization.................................... $6,092.7 million
================
</TABLE>
This means that as of March 31, 1999:
. Our ratio of debt to total capitalization was 59.0%; and
. Our ratio of long-term debt to total capitalization was 55.7%.
Our leverage may have important consequences to holders of the New Notes.
For example, it could:
. limit our ability to obtain additional financing to fund future working
capital requirements, capital expenditures, debt service requirements,
acquisitions or other general corporate requirements;
. require us to use a substantial portion of our cash flow from operations
to pay principal and interest on our indebtedness, which reduces the
funds we will have available to finance operations and future business
opportunities;
. place us at a competitive disadvantage to our competitors that are less
leveraged; and
. increase our vulnerability to adverse economic and industry conditions.
In addition, since certain of our debt is at variable rates of interest, we
will be vulnerable to increases in interest rates. Increases in interest rates
could have a material adverse effect on our operations, liquidity and financial
condition. Our ability to make scheduled principal and interest payments on our
indebtedness and our ability to refinance our indebtedness depend on our future
performance. This performance is, to a certain extent, subject to economic,
financial, competitive and other factors beyond our control.
It is possible that in the future our business may not continue to generate
sufficient cash flow from operations to service our debt and make necessary
capital expenditures. If this occurs, we may be required to adopt one or more
alternatives, such as reducing or delaying planned expansion, selling assets,
restructuring debt or obtaining additional equity capital. There is no
certainty that any of these strategies could be implemented on satisfactory
terms or without substantial additional expense for us. These and other factors
could have a material adverse effect on our results of operations, liquidity
and financial condition and on the marketability, price and future value of the
New Notes.
Our senior credit agreement limits our ability to incur additional debt and
to dispose of assets. Our senior credit agreement also requires us to make
interest and principal payments and payments from material disposals, from
"excess cash flow" and from the proceeds of certain issuances of capital stock
or debt. We must also comply with certain financial ratios and minimum net
worth tests. For more information, we refer you to "Description of Certain
Indebtedness." We may not meet these requirements in the future. If we do not
comply with these requirements, the resulting default under our senior credit
agreement could lead to acceleration of the related debt. Other indebtedness
that contain cross-acceleration or cross-default provisions could also be
accelerated. In such a case, we might not be able to refinance or otherwise
repay such indebtedness.
11
<PAGE>
We may also incur substantial debt in the future, although our ability to do
so is restricted by our senior credit agreement. For more information regarding
our debt and capitalization, we refer you to "Capitalization" and "Description
of Certain Indebtedness."
We may not be able to integrate certain of our acquired businesses
Our business grew in size and complexity due to the acquisitions of T&N,
Fel-Pro and Cooper Automotive. We must integrate operations, management and
personnel of four businesses that previously operated independently and may
encounter difficulties completing this integration. Any material delays or
unexpected costs we incur in connection with the integration process could harm
us and our results of operations, liquidity and financial condition.
We may not achieve desired levels of synergies and the costs of achieving these
synergies may be substantially greater than we anticipate
We analyzed possible economic synergies we hoped to realize as a result of
the acquisitions of T&N, Fel-Pro and Cooper Automotive. It is possible that we
will not achieve the desired levels of synergies. If we fail to achieve our
desired levels of synergies, it could harm our business, results of operations,
liquidity and financial condition.
We have announced that we intend to incur restructuring charges and related
costs of $195 million in connection with synergies targeted for the T&N and
Fel-Pro acquisitions. Of this amount, we expect to ultimately recognize $54
million as expense as incurred, and we have recorded $141 million as a direct
cost of the acquisitions. This is moderately less than the annual level of
synergy benefits anticipated from those acquisitions in the year 2000. In
connection with the Cooper Automotive acquisition, we expect to ultimately
incur restructuring charges and related costs of $126 million. Of this amount,
we expect to ultimately recognize $38 million as expense as incurred, and we
have recorded $88 million as a direct cost of the acquisition. It is possible
that such costs will be substantially greater than these amounts or that
achieving such synergies will require additional costs or charges to earnings
in future periods. Any such cost or charges could harm our business, results of
operations, liquidity and financial condition.
T&N may be subject to material additional asbestos liabilities and significant
additional litigation relating to asbestos that could result in additional
charges not covered by reserves or insurance
T&N and certain of its subsidiaries are among many defendants named in a
large number of court actions brought in the United States, and a smaller
number of claims brought in the United Kingdom, relating to alleged asbestos-
related diseases resulting from exposure to asbestos or products containing
asbestos. T&N is also one of many defendants named in a small number of U.S.
property damage claims. Prior to and including 1996, T&N incurred significant
cost in connection with settling claims, establishing reserves for asbestos
liabilities and obtaining insurance coverage for certain asbestos liabilities.
Prior to our acquisition of T&N, T&N secured a (Pounds)500 million layer of
insurance which will be triggered should the aggregate number of claims
notified after June 30, 1996, where the exposure occurred prior to that date
(which we refer to as IBNR claims), exceed (Pounds)690 million. As of March 31,
1999, we have provided $1.3 billion as its best estimate for future costs
related to resolving asbestos claims. For a more detailed description of T&N's
asbestos liabilities and the financial impact of these liabilities on us, we
refer you to the reports and other information that we have filed with the SEC
and incorporated into this prospectus by reference. Although T&N has carefully
projected its future asbestos liability, the assumptions underlying such
projections continuously change and therefore we cannot project with certainty
the number of such claims that may be made nor the expenditure which may arise
therefrom. T&N may be subject to material additional liabilities and
significant additional litigation relating to asbestos that would result in
additional charges not covered by reserves or insurance. Any such liabilities
or litigation could harm our results of operations, business, liquidity and
financial condition.
12
<PAGE>
We may not succeed in locating and acquiring appropriate companies on
attractive terms, completing potential acquisitions, integrating acquired
companies or realizing desired benefits of such acquisitions
One of our principal business strategies is to acquire businesses both
domestically and internationally in order to expand our manufacturing and
distribution capabilities. We intend to acquire companies that we believe
complement our existing business and will achieve satisfactory rates of return.
We are usually engaged in various stages of evaluating potential acquisition
candidates, and we expect to complete as quickly as possible any acquisition
that we believe meets our criteria. We may not succeed in completing each
potential acquisition and may not in the future succeed in locating and
acquiring appropriate companies on attractive terms, integrating acquired
companies or realizing desired benefits of such acquisitions.
The industry in which we compete is rapidly consolidating, and we cannot
predict or control the timing of certain acquisition opportunities. Certain
potential acquisition opportunities may involve bidding auctions requiring
quick response. Since other companies may also be interested in our potential
acquisition candidates, we may from time to time need to accelerate our
evaluation and pursuit of such candidates. Potential acquisition candidates
could include entities substantially larger than those we have acquired to date
and may involve purchase prices substantially in excess of those paid for
previous acquisitions.
To finance acquisitions, we may need to do one or more of the following:
. increase our outstanding borrowings by a significant amount,
. issue a significant amount of debt securities or
. issue a significant amount of equity securities.
Such borrowings or issuances of debt securities could cause credit rating
agencies to lower their ratings on all or certain of our securities, including
the New Notes, could adversely affect the market price or trading price for
such securities, and may have other important consequences. In addition, such
borrowings or issuances may be on a short-term basis and thus involve a
refinancing risk. We also refer you to "We are substantially leveraged and we
may not be able to generate sufficient cash flow from operations to service our
debt" above. If we are unable to obtain suitable financing, we may be unable to
complete future acquisitions.
The automotive industry is cyclical; a decline in automotive sales and
production could result in a decline in our results of operations or a
deterioration in our financial condition
Our principal operations are directly related to automobile sales and
production in the United States and abroad. Automobile sales and production are
cyclical and can be affected by the strength of a country's general economy. In
addition, automobile production and sales can be affected by labor relations,
regulatory requirements, trade agreements and other factors. A decline in
automotive sales and production would likely affect not only sales to original
equipment customers (purchasers of new automobiles), but also sales to
aftermarket customers (purchasers of replacement parts) and could result in a
decline in our results of operations or a deterioration in our financial
condition. If demand changes and we fail to respond appropriately, our results
of operations could be adversely affected. In addition, technical improvements
in automotive component designs may adversely affect aftermarket demand.
We have substantial international operations that are subject to additional
risks
We have manufacturing and distribution facilities in many countries,
principally in North America, Europe and Latin America. The acquisition of T&N
significantly increased the portion of our business located outside the United
States, though the acquisition of Cooper Automotive partially offset this
effect. International operations are subject to certain risks including:
. exposure to local economic conditions,
. exposure to local political conditions (including the risk of seizure of
assets by foreign governments),
13
<PAGE>
. currency exchange rate fluctuations and currency controls and
. export and import restrictions.
The likelihood of such occurrences and their potential effect on us are
unpredictable and vary from country to country.
We are subject to foreign currency risks
Certain of our operating entities report their financial condition and
results of operations in various foreign currencies (including pounds sterling,
German marks and, to a lesser extent South African rand and French francs). We
translate the reported amounts into U.S. dollars at the applicable exchange
rates in preparing our consolidated financial statements. As a result, the
fluctuating value of the dollar against these foreign currencies will affect
reported sales and operating margin of T&N and other subsidiaries, as
consolidated into Federal-Mogul.
In addition, we are exposed to a risk of loss from changes in foreign
exchange rates whenever we or one of our foreign subsidiaries enters into a
purchase or sales transaction using a currency that is not its normal currency.
While we reduce such risks by matching revenues and costs with the same
currency, changes in currency exchange rates could harm our financial condition
or results of operations.
The global vehicular parts business is highly competitive and if we fail to
successfully compete, our business will be harmed
The global vehicular parts business is highly competitive. We compete with
many of our customers that produce their own components as well as with
independent manufacturers and distributors of components in the United States
and abroad. Certain of our competitors have significantly greater financial and
other resources than us. If we are unable to respond successfully to changing
competitive conditions demand for our products may decline.
USE OF PROCEEDS
We will not receive any proceeds in connection with the exchange offer. In
consideration for issuing the New Notes in exchange for the Old Notes as
described in this prospectus, we will receive, retire and cancel the Old Notes.
The net proceeds from the sale of the Old Notes, after deducting discounts,
commissions and offering expenses were approximately $979.8 million.
We used the net proceeds for the sale of the Old Notes to refinance bank
indebtedness incurred in connection with the acquisitions of T&N, Fel-Pro and
Cooper Automotive.
14
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of Federal-
Mogul at March 31, 1999. Other than as indicated herein, there has been no
material change to the information set forth in this capitalization table
between March 31, 1999 and the date hereof.
<TABLE>
<S> <C>
Short-term debt:(1)............................................ $ 196.1
Long-term debt:
Senior credit agreement--term loans.......................... $ 750.0
Multicurrency revolving credit facility...................... 348.0
7.5% Notes due 2004.......................................... 249.6
7.75% Notes due 2006......................................... 399.9
8.8% Notes due 2007.......................................... 124.7
7.875% Notes due 2010........................................ 349.2
7.375% Notes due 2006........................................ 398.4
7.5% Notes due 2009.......................................... 597.5
Medium-term notes due 1999 through 2005...................... 125.0
ESOP obligation.............................................. 7.9
Other........................................................ 46.5
--------
Total long-term debt (2)................................... $3,396.7
========
Minority interest in consolidated subsidiaries................. 36.5
Company-obligated mandatorily redeemable preferred securities
of subsidiary trust holding solely convertible subordinated
debentures of the Company (3)................................. 575.0
Shareholders' equity:
Series C ESOP Convertible Preferred Stock.................... 43.3
Common Stock................................................. 352.0
Additional paid-in capital................................... 1,780.3
Accumulated deficit.......................................... (44.3)
Unearned ESOP compensation................................... (15.1)
Accumulated other comprehensive income....................... (225.7)
Other........................................................ (2.1)
--------
Total shareholders' equity................................. 1,888.4
--------
Total capitalization....................................... $6,092.7
========
</TABLE>
- --------
(1) Includes current maturities of long-term debt.
(2) Less current maturities of long-term debt.
(3) This consists of Federal-Mogul obligated 7% Trust Convertible Preferred
Securities of Federal-Mogul Financing Trust. Substantially all of the
assets of Federal-Mogul Financing Trust consist of the 7% Convertible
Junior Subordinated Debentures of Federal-Mogul.
15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents information from Federal-Mogul's consolidated
financial statements for the five years ended December 31, 1998 and each of
three months in the periods ended March 31, 1999 and 1998. You should read this
information in conjunction with our financial statements and related notes
contained in the reports and other information that we have filed with the SEC
and incorporated into this prospectus by reference.
<TABLE>
<CAPTION>
Three months ended
March 31,
(unaudited) Year ended December 31,
----------------------- -----------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- --------- ---------
(Millions of Dollars, Except Per Share Amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data
Net sales............... $ 1,642.2 $ 658.0 $ 4,468.7 $ 1,806.6 $ 2,032.7 $ 1,998.8 $ 1,889.5
Costs and expenses...... 1,530.3 (1) 650.4 (2) (4,266.9)(3) (1,703.7)(4) (2,258.0)(5) (2,000.7)(6) (1.795.5)
Other expense, net...... (5.3) (6.0) (16.3) (3.4) (3.4) (2.4) (2.5)
Income tax (expense)
benefit................ (45.2) (8.8) (93.6) (27.5) 22.4) (2.5) (31.8)
--------- --------- --------- --------- --------- --------- ---------
Net earnings (loss)
before extraordinary
items and cumulative
effect of change in
accounting principle... 61.4 (7.2) 91.9 72.0 (206.3) (5.8) 59.7
Extraordinary items--
loss on early
retirement of debt, net
of applicable income
tax benefit............ (23.1) -- (38.2) (2.6) -- -- --
Cumulative effect of
change in accounting
for costs of start up
activities, net of
applicable income tax
benefit................ (12.7) -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net earnings (loss)..... $ 25.6 $ (7.2) $ 53.7 $ 69.4 $ (206.3) $ (5.8) $ 59.7
========= ========= ========= ========= ========= ========= =========
Common Shares Summary
(Diluted)
Average shares and
equivalents outstanding
(in thousands)......... 83,700 40,100 53,748 41,854 34,659 34,642 41,800
Earnings (loss) per
share: Before
extraordinary items and
cumulative effect of
change in accounting
principle.............. $ .80 $ (.20) $ 1.67 $ 1.67 $ (6.20) $ (.42) $ 1.38
Extraordinary items--
Loss on early
retirement of debt and
cumulative effect of
change in accounting
principle, net of
applicable income tax
benefits............... (.42) -- (.71) (.06) -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net earnings (loss) per
share.................. $ .38 $ (.20) $ .96 $ 1.61 $ (6.20) $ ( .42) $ 1.38
========= ========= ========= ========= ========= ========= =========
Dividends declared per
share.................. $ .0025 $ .12 $ .1275 $ .48 $ .48 $ .48 $ .48
========= ========= ========= ========= ========= ========= =========
Consolidated Balance
Sheet Data
Total assets............ $ 9,864.5 $ 7,398.7 $ 9,940.1 $ 1,802.1 $ 1,455.2 $ 1,701.1 $ 1,481.7
Short-term debt (7)..... 196.1 837.8 211.0 28.6 280.1 111.9 74.0
Long-term debt.......... 3,396.7 2,273.7 3,130.7 273.1 209.6 481.5 319.4
Company-obligated
mandatorily redeemable
preferred securities of
subsidiary trust
holding solely
convertible
subordinated debentures
of the Company......... 575.0 575.0 575.0 575.0 -- -- --
Shareholders' equity.... 1,888.4 586.0 1,986.2 369.3 318.5 550.3 588.5
Other Financial
Information
Net cash provided from
(used by) operating
activities............. $ (31.9) $ 82.7 $ 325.5 $ 215.7 $ 149.0 $ (34.7) $ 24.3
Expenditures for
property, plant,
equipment and other
long-term assets....... 75.2 19.5 228.5 49.7 54.2 78.5 74.9
Depreciation and
amortization expense... 88.8 29.8 228.0 51.5 61.9 59.2 54.6
</TABLE>
- --------
(1) Includes a $10.1 million charge for integration costs.
16
<PAGE>
(2) Includes a $10.5 million restructuring charge, a $20.0 million charge for
adjustment of assets held for sale and other long-lived assets to fair
value, an $18.6 million charge for purchased in-process research and
development, and a $13.3 million net gain related to the British pound
currency option and forward contract.
(3) Includes a $7.3 million net restructuring charge, a $19.0 million net
charge for adjustment of assets held for sale and other long-lived assets
to fair value, an $18.6 million charge for purchased in-process research
and development, a $22.4 million charge for integration costs, and a $13.3
million net gain related to the British pound currency option and forward
contract.
(4) Includes a $1.1 million net restructuring credit, a $2.4 million charge for
adjustment of assets held for sale and other long-lived assets to fair
value, a $1.6 million credit for reengineering and other related charges,
and a $10.5 million charge related to the British pound currency option and
forward contract.
(5) Includes a $57.6 million restructuring charge, a $151.3 million charge for
adjustment of assets held for sale and other long-lived assets to fair
value, and $11.4 million relating to reengineering and other related
charges.
(6) Includes a $26.9 million restructuring charge, a $51.8 million charge for
adjustment of assets held for sale and other long-lived assets to fair
value, and $13.9 million relating to reengineering and other related
charges.
(7) Includes current maturities of long-term debt.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
The following table shows our ratio of earnings to fixed charges and our
ratio of earnings to combined fixed charges and preferred stock dividends for
the three months ended March 31, 1999 and for each of the five most recent
fiscal years.
<TABLE>
<CAPTION>
Three Months
Ended
March 31, Year Ended December 31,
------------- ----------------------------
1999 1998 1998 1997 1996 1995 1994
------ ------ ---- ---- ----- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges(1)......................... 2.5x 1.1x 1.8x 3.3x N/A(2) N/A(3) 4.3x
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends(1)....................... 2.4x 1.1x 1.8x 2.9x N/A(2) N/A(3) 3.1x
</TABLE>
- --------
(1) Federal-Mogul guarantees the debt of the Federal-Mogul Employee Stock
Ownership Plan ("ESOP"); the fixed charges of the ESOP are not included in
the above calculations.
(2) Not applicable as 1996 earnings were inadequate to cover fixed charges by
$173.0 million.
(3) Not applicable as 1995 earnings were inadequate to cover fixed charges by
$53.4 million.
The ratio of earnings to fixed charges has been computed by dividing
earnings by fixed charges. The ratio of earnings to combined fixed charges and
preferred stock dividends has been computed by dividing earnings by the sum of
fixed charges and preferred stock dividend requirements. Earnings consist of
income before income taxes plus fixed charges excluding capitalized interest.
Fixed charges consist of interest on all indebtedness, amortization of debt
issuance costs and the portion of rental expense representative of interest.
EXCHANGE OFFER; REGISTRATION RIGHTS
We sold the Old Notes on January 20, 1999 (the "Issue Date") to the initial
purchasers in a private offering. As a condition to the sale of the Old Notes,
we and certain of the initial purchasers entered into the Registration Rights
Agreement on the Issue Date. The registration statement, of which this
prospectus is part, is intended to satisfy certain of our obligations under the
Registration Rights Agreement summarized below.
17
<PAGE>
Pursuant to the Registration Rights Agreement, we agreed to file, and to
cause the subsidiary guarantors of the Old Notes to file, with the SEC, subject
to the next paragraph, an exchange offer registration statement in the
appropriate form under the Securities Act of 1933 with respect to an offer to
exchange the Old Notes for the New Notes and to offer to the holders of Old
Notes who are able to make certain representations the opportunity to exchange
their Old Notes for New Notes.
. If we or the guarantors of the Old Notes are not permitted to file such
registration statement or to effect the exchange offer because of any
changes in law, SEC rules or regulations or applicable interpretations
thereof by the SEC staff;
. If the exchange offer is not for any other reason declared effective
within 240 days after the Issue Date or the exchange offer is not
consummated within 270 days after the Issue Date; or
. If a holder of Old Notes notifies us within a specified time period that
it is not permitted to participate in the exchange offer or it does not
receive fully tradeable New Notes pursuant to the exchange offer;
then we and the guarantors will, as promptly as practicable, file with the SEC
a shelf registration statement to cover resales of the transfer restricted
notes. We will use our, and will cause the guarantors to use their, best
efforts to cause the registration statement to be declared effective as
promptly as possible but not later than the later of (a) 240 days after the
Issue Date or (b) 30 days after such filing obligation arises (or 90 days in
the event that the SEC performs a full review of such shelf registration
statement).
"Transfer restricted note" means each Old Note until:
. the date on which a registration statement with respect to such Old Note
shall have been declared effective under the Securities Act of 1933 and
such Old Note shall have been disposed of pursuant to such registration
statement;
. the date on which such Old Note has been sold to the public pursuant to
Rule 144 or eligible to be sold pursuant to Rule 144(k) under the
Securities Act of 1933 (or any similar provision then in force, but not
Rule 144A under the Securities Act of 1933);
. such Old Note ceases to be outstanding;
. such Old Note is otherwise transferred by the holder of such Old Note and
we have delivered a New Note not bearing a legend restricting further
transfer, and subsequent disposition of such Old Note does not require
registration or qualification under the Securities Act of 1933; or
. the date on which the exchange offer is consummated (except in the case
of Old Note purchased from us and continuing to be held by the initial
purchasers).
We believe that under existing SEC interpretations, the New Notes would, in
general, be freely transferable after the exchange offer without further
registration under the Securities Act of 1933. However, in the case of broker-
dealers participating in the exchange offer, a prospectus meeting the
requirements of the Securities Act of 1933 must be delivered by such broker-
dealers in connection with resales of the New Notes. We refer you to the
"Morgan Stanley & Co. Inc." SEC No-Action Letter available June 5, 1991, "Exxon
Capital Holdings Corporation" SEC No-Action Letter available May 13, 1988 and
"Shearman & Sterling" SEC No-Action Letter available July 2, 1993 for these SEC
interpretations.
We have agreed to make available a prospectus meeting the requirements of
the Securities Act of 1933 to any such broker-dealer for use in connection with
any resale of any New Notes acquired in the exchange offer for a period of 180
days after consummation of the resale of any New Notes acquired in the exchange
offer. A broker-dealer that delivers such a prospectus to purchasers in
connection with such resales will be subject to certain of the civil liability
provisions under the Securities Act of 1933 and will be bound by certain
provisions of the Registration Rights Agreement (including certain
indemnification rights and obligations).
18
<PAGE>
If you hold Old Notes and wish to exchange such Old Notes for New Notes in
the exchange offer, you will be required to make certain representations,
including representations that:
. any New Notes to be received by you will be acquired in the ordinary
course of its business;
. you have no arrangement or understanding with any person to participate
in the distribution (within the meaning of the Securities Act of 1933) of
the New Notes;
. you are not an affiliate of Federal-Mogul (as defined in Rule 405 under
the Securities Act of 1933); and
. such other representations reasonably necessary under applicable SEC
rules, regulations or interpretations.
If you are not a broker-dealer, you will be required to represent that you
are not engaged in, and do not intend to engage in, the distribution of the New
Notes. If you are a broker-dealer and you are receiving New Notes for your own
account in exchange for Old Notes that were acquired as a result of market-
making activities or other trading activities, you will be required to
acknowledge that you will deliver a prospectus in connection with any resale of
such New Notes.
We have agreed to pay the expenses incident to the exchange offer and will
indemnify the initial purchasers against certain liabilities, including
liabilities under the Securities Act of 1933.
The SEC has recently proposed that its interpretations referred to above be
repealed if the SEC adopts certain proposed rule changes under the Securities
Act of 1933, and has indicated that it may repeal these interpretations in any
event. If those interpretations are repealed before the exchange offer is
consummated so that the exchange offer would no longer be permissible, then
holders of the Old Notes will not be able to receive New Notes pursuant to an
exchange offer. Rather, the Old Notes will only be registered in connection
with resales by the holders. In connection with such resales, the holders will
be required to deliver a prospectus to the purchasers and will be subject to
certain of the civil liability provisions under the Securities Act of 1933.
The Registration Rights Agreement provides that:
. we and the guarantors will file such registration statement with the SEC
as soon as practicable but not later than 180 days after the Issue Date,
unless the exchange offer would not be permitted by applicable law or SEC
policy;
. we will use our best efforts to cause such registration statement to be
declared effective by the SEC within 240 days of the Issue Date, unless
the exchange offer would not be permitted by applicable law or SEC
policy;
. we will use our best efforts to keep the exchange offer registration
statement effective until the closing of the exchange offer and to cause
the exchange offer to be consummated not later than 270 days following
the Issue Date, unless the exchange offer would not be permitted by
applicable law or SEC policy; and
. if obligated to file the shelf registration statement, we and the
guarantors, as applicable, will file with the SEC a shelf registration
statement, as promptly as practicable, and thereafter will use our best
efforts to cause such shelf registration statement to be declared
effective as promptly as practicable but not later than the later of (a)
240 days after the Issue Date or (b) 30 days after such filing obligation
arises (or 90 days in the event that the SEC performs a full review of
such shelf registration statement).
We and the guarantors, as applicable, have agreed to use our best efforts to
keep such shelf registration statement continuously effective, supplemented and
amended until the second anniversary of the Issue Date or such shorter period
that will terminate when all the transfer restricted notes covered by the shelf
registration statement have been sold pursuant to the shelf registration
statement or cease to be outstanding. However, we and the guarantors will be
permitted to suspend the use of the prospectus that is a part of such shelf
registration statement for a period not to exceed 30 days in any three-month
period if compliance with our obligations
19
<PAGE>
under the Registration Rights Agreement would require us to disclose under
applicable law material non-public information that we have a bona fide
business purpose in not disclosing. This period may be extended to 60 days in
any three-month period under certain circumstances relating to material
acquisitions and similar transactions involving Federal-Mogul, but not more
than 120 days in any twelve-month period. A holder of Old Notes that sells its
Old Notes pursuant to the shelf registration statement generally will be
required to be named as a selling security holder in the related prospectus and
to deliver a prospectus to purchasers, will be subject to certain of the civil
liability provisions under the Securities Act of 1933 in connection with such
sales and will be bound by the provisions of the Registration Rights Agreement
that are applicable to such holder (including certain information,
indemnification and contribution obligations).
Each of the following is a "registration default":
. If we and the guarantors fail to file the exchange offer registration
statement on or before the 180th day after the Issue Date, unless the
exchange offer would not be permitted by applicable law or SEC policy;
. If the exchange offer registration statement is not declared effective by
the SEC on or prior to the 240th day after the Issue Date, unless the
exchange offer would not be permitted by applicable law or SEC policy;
. If the exchange offer is not consummated on or prior to the 270th day
after the Issue Date, unless the exchange offer would not be permitted by
applicable law or SEC policy; or
. If a shelf registration statement is required to be filed, such shelf
registration statement is not declared effective on or before the date
specified above for such effectiveness.
If a registration default occurs then the interest rate borne by the Old
Notes as to which a registration default exists will be increased by 0.25% per
year with respect to the first 90-day period (or portion thereof) during which
a registration default is continuing immediately following the occurrence of
such registration default, and such interest rate shall increase by an
additional 0.25% per year at the beginning of each subsequent 90-day period
while a registration default is continuing until all registration defaults have
been cured, up to a maximum rate of additional interest of 1.00% per year.
If the shelf registration statement ceases to be effective or is unusable by
the holders of the Old Notes for any other reason for more than 30 days in the
aggregate in any twelve-month period other than as permitted above, then the
interest rate on the Old Notes as to which such default exists will be
increased by 0.25% per year with respect to the first 90-day period (or a
portion thereof) beginning on the 31st day after the shelf registration
statement ceases to be effective or otherwise usable, and increasing an
additional 0.25% per year at the beginning of each subsequent 90-day period
during which the shelf registration statement ceases to be effective or
otherwise usable, up to a maximum rate of additional interest of 1.00% per
year.
Additional interest as a result of a registration default shall cease to
accrue (but any accrued amount shall be payable) and the interest rate on the
Old Notes will revert to the original rate if the registration default giving
rise to such increase is no longer continuing and no other registration default
has occurred and is continuing.
The description above of the Registration Rights Agreement summarizes
material provisions but does not restate such provisions or summarize all of
the provisions. You should read the Registration Rights Agreement. You can
obtain a copy of the Registration Rights Agreement upon request from Federal-
Mogul.
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this prospectus
and the letter of transmittal, we will accept any and all of the Old Notes
validly tendered and not withdrawn prior to the expiration date of the exchange
offer. As of the date of this prospectus, $400 million aggregate principal
amount of 7 3/8% Notes due 2006 is outstanding and $600 million aggregate
principal amount of 7 1/2% Notes due 2009 is outstanding. This
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prospectus, together with the letter of transmittal, is first being sent on or
about July 14, 1999, to all holders of Old Notes known to us. Our obligation to
accept the Old Notes for exchange pursuant to the exchange offer is subject to
the conditions as set forth under "--Certain Conditions to the Exchange Offer"
below. We will issue $1,000 principal amount of New Notes in exchange for
$1,000 principal amount of outstanding Old Notes accepted in the exchange
offer. Holders of Old Notes may tender some or all of their Old Notes pursuant
to the exchange offer. See "--Consequences of Failure to Exchange." However,
the Old Notes may be tendered only in integral multiples of $1,000.
The New Notes will evidence the same debt as the Old Notes for which they
are exchanged, and are entitled to the benefits of the indenture covering the
Old Notes (the "Indenture"). The form and terms of the New Notes are the same
in all material respects as the form and terms of the Old Notes, except that
the New Notes have been registered under the Securities Act of 1933. Therefore,
the New Notes will not bear legends restricting their transfer.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the Indenture in connection with the exchange offer. We intend to conduct the
exchange offer in accordance with the applicable requirements of Regulation 14E
under the Securities Exchange Act of 1934.
We shall be deemed to have accepted validly tendered Old Notes when, as, and
if we have given verbal or written notice of our acceptance to the exchange
agent. The exchange agent will act as agent for the tendering holders of Old
Notes for the purpose of receiving the New Notes.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, or the failure to satisfy other conditions to the exchange
offer or otherwise, we will return such unaccepted tenders of Old Notes without
expense to the holder of the Old Notes, as promptly as practicable after the
expiration date of the exchange offer.
Holders of Old Notes whose Old Notes are not tendered or are tendered but
not accepted in the exchange offer will continue to hold such Old Notes and
will be entitled to all the rights and preferences and subject to the
limitations applicable to the Old Notes under the Indenture. Following
completion of the exchange offer, the noteholders will continue to be subject
to the existing restrictions upon transfer of the Old Notes and we will have no
further obligation to those noteholders to provide for the registration under
the Securities Act of 1933 of the Old Notes held by them. To the extent the Old
Notes are tendered and accepted in the exchange offer, the trading market for
untendered, and tendered but unaccepted, Old Notes could be adversely affected.
See "Risk Factors--The Old Notes are subject to transfer restrictions and there
is a limited trading market for the Old Notes."
Noteholders who tender Old Notes in the exchange offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
letter of transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the exchange offer. We will pay all charges and expenses, other
than certain applicable taxes, in connection with the exchange offer. See "--
Fees and Expenses; Solicitation of Tenders."
Expiration Date; Extensions; Amendments
Expiration Date means 5:00 p.m., New York City time on August 13, 1999
unless we extend the exchange offer. If we do extend the exchange offer, the
term expiration date shall mean the date and time to which the exchange offer
is extended.
We may extend the expiration date of the exchange offer from time to time by
giving written or oral notice to the exchange agent and by timely public
announcement.
We reserve the right at our sole discretion:
. to delay accepting any Old Notes;
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. to extend the exchange offer;
. to amend the terms of the exchange offer in any manner; or
. to terminate the exchange offer and not accept any Old Notes not
previously accepted if any of the conditions set forth below under "--
Certain Conditions to the Exchange Offer" shall have occurred and shall
not have been waived by us.
Any such delay in acceptance, extension, amendment or termination will be
followed as promptly as practicable by written or oral notice thereof to the
noteholders. During any extension of the expiration date of the exchange offer,
all Old Notes previously tendered will remain subject to the exchange offer and
may be accepted for exchange by us. We shall have no obligation to publish,
advertise, or otherwise communicate any such public announcement, other than by
making a timely release to an appropriate news agency.
Interest on the New Notes
Interest accrues on the new 7 3/8% Notes at the rate of 7 3/8% per annum and
on the new 7 1/2% Notes at the rate of 7 1/2% per annum and will be payable in
each case in cash semiannually in arrears on each January 15 and July 15,
commencing January 15, 2000. Interest on the Old Notes accepted for exchange
will cease to accrue upon issuance of the New Notes.
Procedures for Tendering the Old Notes
When a beneficial owner of Old Notes tenders them to Federal-Mogul as set
forth below and Federal-Mogul accepts the Old Notes, the beneficial owner of
the Old Notes and Federal-Mogul will be deemed to have entered into a binding
agreement upon the terms and subject to the conditions set forth in this
prospectus and the letter of transmittal.
Except as set forth below, if you wish to tender the Old Notes for exchange
pursuant to the exchange offer, you must transmit a properly completed and duly
executed letter of transmittal, including all other documents required by such
letter of transmittal, to the exchange agent at one of the addresses set forth
below under "Exchange Agent") on or prior to the expiration date of the
exchange offer. In addition:
. the exchange agent must receive certificates for such Old Notes along
with the letter of transmittal;
. the exchange agent must receive prior to the expiration date of the
exchange offer a timely confirmation of a book-entry transfer of such Old
Notes into the exchange agent's account at The Depository Trust Company
pursuant to the procedure for book-entry transfer described below; or
. the noteholder must comply with the guaranteed delivery procedures
described below.
The method of delivery of Old Notes, letters of transmittal and all other
required documents is at the election and risk of the noteholder. If such
delivery is by mail, we recommend that registered mail, properly insured, with
return receipt requested, be used. In all cases, you should allow sufficient
time to assure timely delivery. You should not send letter of transmittal or
Old Notes to Federal-Mogul directly.
Each signature on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless:
. tendered Old Notes are registered in the name of the signer of the letter
of transmittal and the New Notes are to be issued (and any untendered Old
Notes are to be reissued) in the name of such registered noteholder and
delivered to the address of such registered noteholder as appears on the
note register for the Old Notes; or
. for the account of an Eligible Institution (as defined below).
In the event that a signature on a letter of transmittal or a notice of
withdrawal, as the case may be, is required to be guaranteed, such guarantee
must be by a firm which is a member of a registered national
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securities exchange or a member of the National Association of Securities
Dealers, Inc. or by a commercial bank or trust company having an office or
correspondence in the United States or otherwise an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Exchange Act of 1934
(collectively, "Eligible Institutions"). If the Old Notes are registered in the
name of a person other than the person signing the letter of transmittal, the
Old Notes surrendered for exchange must be endorsed by, or be accompanied by, a
written instrument or instruments of transfer or exchange, in satisfactory form
as determined by us in our sole discretion, duly executed by the registered
noteholder with the signature thereon guaranteed by an Eligible Institution. In
either case, the Old Notes must be signed exactly as the name or names of the
registered noteholder or noteholders that appear on the Old Notes.
If a trustee, executor, administrator, guardian, attorney-in-fact, officer
of a corporation or another acting in a fiduciary or representative capacity
signs the letter of transmittal or any Old Notes or powers of attorney, the
person signing should indicate in which capacity he or she is signing and,
unless waived by us, submit proper evidence satisfactory to us of his or her
authority to sign with the letter of transmittal.
By tendering, each noteholder will represent to us that, among other things:
. the New Notes acquired pursuant to the exchange offer are being acquired
in the ordinary course of business of the person receiving such New
Notes, whether or not that person is the noteholder;
. neither the noteholder nor any other person receiving such New Notes has
an arrangement or understanding with any person to participate in the
distribution of such New Notes;
. if the noteholder is not a broker-dealer, or is a broker-dealer but will
not receive New Notes for its own account in exchange for the Old Notes,
neither the noteholder nor any other person receiving such New Notes is
engaged in or intends to participate in the distribution of such New
Notes; and
. neither the noteholder nor any other person receiving such New Notes is
an "affiliate" of Federal-Mogul, as defined under Rule 405 of the
Securities Act.
If the tendering noteholder is a broker-dealer that will receive New Notes
for its own account in exchange for Old Notes that were acquired as a result of
marker-making activities or other trading activities, the noteholder will be
required to acknowledge that it will deliver a prospectus in connection with
any resale of such New Notes. The letter of transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act of 1933.
Delivery of documents to The Depository Trust Company or Federal-Mogul does
not constitute delivery to the exchange agent
We will determine in our sole discretion all questions as to the validity,
form, eligibility (including time of receipt) and acceptance of the Old Notes
tendered for exchange, which determination shall be final and binding. We
reserve the absolute right to reject any and all tenders of any particular Old
Notes not properly tendered or to not accept any particular Old Notes which
acceptance might, in our judgment or our counsel's judgment, be unlawful. We
also reserve the absolute right in our sole discretion to waive any defects or
irregularities or conditions of the exchange offer as to any particular Old
Notes either before or after the expiration date of the exchange offer
(including the right to waive the ineligibility of any noteholder who seeks to
tender Old Notes in the exchange offer). The interpretation of the terms and
conditions of the exchange offer as to any particular Old Notes either before
or after the expiration date of the exchange offer (including the letter of
transmittal and its instructions) by us shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with the
tenders of Old Notes for exchange must be cured within a reasonable period of
time as we shall determine. Neither Federal-Mogul, the exchange agent nor any
other person shall be under any duty to give notification of any defect or
irregularities with respect to any tender of Old Notes for exchange, nor shall
any of them incur any liability for failure to give such notification.
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Acceptance of the Old Notes for Exchange; Delivery of the New Notes
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the expiration date of the exchange offer, all
Old Notes properly tendered and will issue the New Notes promptly after
acceptance of the Old Notes. See "--Certain Conditions to the Exchange Offer"
below. For purposes of the exchange offer, we shall be deemed to have accepted
properly tendered Old Notes for exchange when, and if, we have given verbal or
written notice of our acceptance to the exchange agent.
In all cases, issuance of the New Notes for the Old Notes that are accepted
for exchange pursuant to the exchange offer will be made only after timely
receipt by the exchange agent of the following:
. certificates for such Old Notes or a timely confirmation of a book-entry
transfer of such Old Notes into the exchange agent's account at The
Depository Trust Company pursuant to the book-entry transfer procedures
described below;
. a properly completed and duly executed letter of transmittal; and
. all other required documents.
If any tendered Old Notes are not accepted for any reason set forth in the
terms and conditions of the exchange offer or if certificates representing the
Old Notes are submitted for a greater principal amount than the noteholder
desires to exchange, those unaccepted or non-exchanged Old Notes will be
returned without expense to the tendering noteholder thereof (or, in the case
of Old Notes tendered by book-entry transfer into the exchange agent's account
at The Depository Trust Company pursuant to the book-entry transfer procedures
described below, those non-exchanged Old Notes will be credited to an account
maintained with The Depository Trust Company) as promptly as practicable after
the expiration or termination of the exchange offer.
Book-Entry Transfer
The exchange agent will make a request to establish an account with respect
to the Old Notes at The Depository Trust Company for purposes of the exchange
offer within two days after the date of this prospectus. Any financial
institution that is a participant in The Depository Trust Company's systems may
make book-entry delivery of the Old Notes by causing The Depository Trust
Company to transfer such Old Notes into the exchange agent's account at The
Depository Trust Company in accordance with The Depository Trust Company's
Automated Tender Offer Program ("ATOP") procedures for transfer. However, the
exchange for the Old Notes so tendered will only be made after timely
confirmation of such book-entry transfer of Old Notes into the exchange agent's
account, and timely receipt by the exchange agent of an Agent's Message (as
such term is defined in the next sentence) and any other documents required by
the letter of transmittal on or prior to the expiration date of the exchange
offer or pursuant to the guaranteed delivery procedures described below. The
term "Agent's Message" means a message, transmitted by The Depository Trust
Company and received by the exchange agent and forming a part of a timely
confirmation of a book-entry transfer, which states that The Depository Trust
Company has received an express acknowledgment from a noteholder tendering Old
Notes that are the subject of such timely confirmation of a book-entry transfer
that such noteholder has received and agrees to be bound by the terms of the
letter of transmittal, and that we may enforce such agreement against such
noteholder.
Guaranteed Delivery Procedures
If a registered holder of the Old Notes desires to tender such Old Notes and
the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the exchange agent
before the expiration date of the exchange offer, or the procedure for book-
entry transfer cannot be completed on a timely basis, a tender may be effected
if:
. the tender is made through an Eligible Institution;
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. prior to the expiration date of the exchange offer, the exchange agent
receives from such Eligible Institution a notice of guaranteed delivery,
substantially in the form provided by us (by facsimile transmission, mail
or hand delivery), setting forth the name and address of the noteholder
and the amount of Old Notes tendered, the names in which the Old Notes
are registered and, if possible, the certificate numbers of the Old Notes
to be tendered and stating that the tender is being made thereby and
guaranteeing that within three business days after the expiration date,
the certificates of all physically tendered Old Notes, in proper form for
transfer, or a timely confirmation of a book-entry transfer, as the case
may be, a properly completed and duly executed letter of transmittal and
any other required documents will be deposited by the Eligible
Institution with the exchange agent; and
. the certificates for all physically tendered Old Notes, in proper form
for transfer, or a timely confirmation of a book-entry transfer, as the
case may be, and all other documents required by the letter of
transmittal, are received by the exchange agent within three business
days after the expiration date of the exchange offer.
Withdrawal Rights
You may withdraw your tender of the Old Notes at any time prior to the
expiration date of the exchange offer.
For a withdrawal to be effective, the exchange agent must receive a written
notice of withdrawal at the address or facsimile number set forth below under
"Exchange Agent." Any such notice of withdrawal must:
. specify the name of the person having tendered the Old Notes to be
withdrawn;
. identify the Old Notes to be withdrawn (including the certificate numbers
and principal amount of such Old Notes);
. specify the principal amount of Old Notes to be withdrawn;
. include a statement that the noteholder is withdrawing his or her
election to have such Old Notes exchanged;
. be signed by the noteholder in the same manner as on the original letter
of transmittal or as otherwise described above (including required
signature guarantees) or be accompanied by such documents of transfer
sufficient to have the Trustee register the transfer of such Old Notes
into the names of the person withdrawing the tender; and
. specify the name in which such Old Notes are registered, if different
from that of the withdrawing noteholder.
If certificates for Old Notes have been delivered or otherwise identified to
the exchange agent, then, prior to the release of such certificates, the
withdrawing noteholder must also submit the certificate numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such noteholder is an
Eligible Institution. If Old Notes have been tendered pursuant to the procedure
for book-entry transfer described above, any notice of withdrawal must specify
the name and number of the account at The Depository Trust Company to be
credited with the withdrawn Old Notes and otherwise comply with the procedures
of such facility. We will determine all questions as to the validity, form and
eligibility (including time of receipt) of such notices, which shall be final
and binding on all parties. Any Old Notes so withdrawn will be deemed not to
have been validly tendered for exchange for purposes of the exchange offer. Old
Notes which have been tendered for exchange but which are not exchanged for any
reason will be returned to the noteholder thereof without cost to such
noteholder (or, in the case of Old Notes tendered by book-entry transfer
procedures described above, such Old Notes will be credited to an account
maintained with the Depository Trust Company for the Old Notes) as soon as
practicable after withdrawal, rejection of tender or termination of the
exchange offer. You may re-tender your properly withdrawn Old Notes by
following one of the procedures described under "--Procedures for Tendering the
Old Notes" above at any time on or prior to the expiration date of the exchange
offer.
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Certain Conditions to the Exchange Offer
Notwithstanding any other provision of the exchange offer, we shall not be
required to accept for exchange, or to issue New Notes in exchange for, any Old
Notes and may terminate or amend the exchange offer, if at any time before the
acceptance of such Old Notes for exchange or the exchange of the New Notes for
such Old Notes, there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been issued
by, any court or governmental agency or other governmental regulatory or
administrative agency or commission:
(1) seeking to restrain or prohibit the making or consummation of the
exchange offer or any other transaction contemplated by the exchange
offer, or assessing or seeking any damages as a result thereof, or
(2) resulting in a material delay in our ability to accept for exchange or
exchange some or all of the Old Notes pursuant to the exchange offer;
or
(3) any statute, rule, regulation, order or injunction shall be sought,
proposed, introduced, enacted, promulgated or deemed applicable to the
exchange offer or any of the transactions contemplated by the exchange
offer by any government or governmental authority, domestic or foreign;
or
(4) any action shall have been taken, proposed or threatened, by any
government, governmental authority, agency or court, domestic or
foreign;
that in our sole judgment might directly or indirectly result in any of the
consequences referred to in (1) or (2) above or, in our sole judgment, might
result in the holders of New Notes having obligations with respect to resales
and transfer of New Notes which exceed those described in this prospectus, or
would otherwise make it inadvisable to proceed with the exchange offer.
If we determine in good faith that any of the conditions are met, we may:
. refuse to accept any Old Notes and return all tendered Old Notes to
exchanging noteholders;
. extend the exchange offer and retain all Old Notes tendered prior to the
expiration of the exchange offer, subject, however, to the rights of
noteholders to withdraw such Old Notes (see "--Withdrawal Rights"); or
. waive certain of such unsatisfied conditions with respect to the exchange
offer and accept all properly tendered Old Notes which have not been
withdrawn or revoked. If such waiver constitutes a material change to the
exchange offer, we will promptly disclose such waiver by means of a
prospectus supplement that will be distributed to all noteholders.
Noteholders have certain rights and remedies against us under the
Registration Rights Agreement, including liquidated damages in the event that
we fail to consummate the exchange offer within a certain period of time, even
if the failure is due to the occurrence of any of the conditions stated above.
Such conditions are not intended to modify those rights or remedies in any
respect.
The foregoing conditions are for our benefit and may be asserted by us in
good faith regardless of the circumstances giving rise to such condition or may
be waived by us in whole or in part at any time and from time to time in our
discretion. The failure by us at any time to exercise the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to
time.
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Exchange Agent
We have appointed The Bank of New York as exchange agent for the exchange
offer. You should direct your questions and requests for assistance, requests
for additional copies of this prospectus or of the letter of transmittal to the
exchange agent addressed as follows:
By registered or certified mail, by overnight courier, or by hand:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Martha James
Telephone: (212) 815-6335
Facsimile: (212) 815-4699
If you deliver to an address other than as set forth above or transmit
instructions via facsimile other than as set forth above, it will not be a
valid delivery.
Fees and Expenses; Solicitation of Tenders
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, additional solicitation may be made by
telegraph, facsimile, telephone or in person by our officers and regular
employees and our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptance of the exchange offer. We, however, will pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection with the exchange offer.
The cash expenses to be incurred in connection with the exchange offer will
be paid by us and are estimated in the aggregate to be $75,000, which includes
fees and expenses of the exchange agent and the trustee under the Indenture and
accounting and legal fees.
We will pay all transfer taxes, if any, applicable to the exchange of the
Old Notes pursuant to the exchange offer. If, however, certificates
representing the New Notes or the Old Notes for principal amounts not tendered
or accepted for exchange are to be delivered to, or are to be registered or
issued in the name of, any person other than the registered noteholders
tendered, or if a transfer tax is imposed for any reason other than the
exchange of the Old Notes pursuant to the exchange offer, then the tendering
noteholder must pay the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons). If a tendering noteholder does not
submit satisfactory evidence of payment of such taxes or exemption therefrom to
the exchange agent, the amount of such transfer taxes will be billed directly
to such tendering noteholder.
We have not authorized any person to give any information or to make any
representations in connection with the exchange offer other than those
contained in this prospectus. If given or made, such information or
representations should not be relied upon as having been authorized by us.
Neither the delivery of this prospectus nor any exchange made hereunder shall,
under any circumstances, create any implication that there has been no change
in our affairs since the respective dates as of which information is given in
this prospectus. The exchange offer is not being made to (nor will tenders be
accepted from or on behalf of) noteholders in any jurisdiction in which the
making of the exchange offer or the acceptance of this prospectus would not be
in compliance with the laws of such jurisdiction.
Accounting Treatment
We will record the New Notes at the same carrying value as the Old Notes,
which is face value, as recorded in our accounting records on the date of the
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized. The costs of the exchange offer will be expensed over the term of
the New Notes.
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Consequences of Failure to Exchange
If you do not exchange your Old Notes for New Notes pursuant to the exchange
offer, you will continue to be subject to the restrictions on transfer of such
Old Notes as set forth in the legend on the Old Notes. In general, you may not
offer to sell or sell the Old Notes, unless registered under the Securities Act
of 1933, except pursuant to an exemption from, or in a transaction not subject
to, the Securities Act of 1933 and applicable state securities laws. We do not
intend to register the Old Notes under the Securities Act of 1933. We believe
that, based upon interpretations contained in no-action letters issued to third
parties by the staff of the SEC, any noteholder may offer for resale, resell or
otherwise transfer the New Notes issued pursuant to the exchange offer in
exchange for the Old Notes (unless the noteholder is an "affiliate" of Federal-
Mogul within the meaning of Rule 405 under the Securities Act of 1933) without
compliance with the registration and prospectus delivery provisions of the
Securities Act of 1933, provided that:
. the noteholder acquires the New Notes in the ordinary course of its
business; and
. the noteholder has no arrangement with any person to participate in the
distribution of such Old Notes; and
. each broker-dealer that receives new Notes for its own account in
exchange for Old Notes must acknowledge that it will deliver a prospectus
in connection with any resale of such New Notes. See "Plan of
Distribution."
If any noteholder (other than a broker-dealer described in the preceding
sentence) has any arrangement or understanding with respect to the distribution
of the New Notes to be acquired pursuant to the exchange offer, such noteholder
could not rely on the applicable interpretations of the staff of the SEC and
must comply with the registration and prospectus delivery requirements of the
Securities Act of 1933 in connection with any resale transaction. In addition,
to comply with the securities laws of certain jurisdictions, if applicable, you
may not offer or sell the New Notes unless they have been registered or
qualified for sale in such jurisdiction or an exemption from registration or
qualification is available and is complied with.
DESCRIPTION OF CERTAIN INDEBTEDNESS
Senior Credit Agreement
General
In February 1999, we refinanced our existing credit facilities and entered
into a five-year $1.75 billion senior credit facility (the "Senior Credit
Agreement") consisting of a $1.0 billion revolving credit facility, a $400
million Tranche A Term Loan and a $350 million Tranche B Term Loan, each with
The Chase Manhattan Bank ("Chase") as agent and a syndicate of lenders. The
entire amount of the Tranche A and B Term Loans were drawn down as well as $373
million of the revolving credit facility. The proceeds were used to repay the
outstanding amounts owing under a $2.75 billion floating rate senior credit
facility and a $1.95 billion floating rate senior credit agreement, each of
which we entered into with Chase as agent and a syndicate of lenders.
The Tranche A Term Loans mature on February 24, 2004 and are to be repaid in
17 quarterly installments commencing February 24, 2000, the amount of each
quarterly installment being $10 million in February 2000 through February 2001,
$25 million in March 2001 through February 2003, $35 million in March 2003
through November 2003, and $45 million in February 2004. The Tranche B Term
Loans mature on February 24, 2005 and are to be repaid in 21 quarterly
installments commencing February 24, 2000, the amount of each installment being
$1 million through February 2004, $50 million March 2004 through November 2004
and $183 million in February 2005.
Under the Senior Credit Agreement, we may borrow up to an aggregate amount
of $1 billion outstanding at any time in revolving credit loans, which are
available for working capital, acquisitions, and general corporate purposes for
a period of five years commencing February 24, 1999. Up to $125 million of the
revolving credit loans may be borrowed in currencies other than U.S. dollars.
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Indebtedness under the Senior Credit Agreement bears interest at a floating
rate based upon, at our option, either:
. the prime rate of Chase ("Base Rate"), plus a margin, or
. the average of the offering rates of certain banks in the London
interbank eurodollar market for U.S. dollar deposits ("Eurodollar Rate"),
plus a margin.
The applicable margins depend upon our consolidated leverage ratio:
-- in the case of Base Rate loans, the applicable margin will vary
between 0% and 0.375% for the revolving credit loans, 0.0% and 0.75%
for Tranche A Term Loans and 1.0% for Tranche B Term Loans; and
-- in the case of Eurodollar Rate loans, the applicable margin will vary
between 0.75% and 1.375% for the revolving credit loans, 1.0% and
1.75% for Tranche A Term Loans and 2.0% for Tranche B Term Loans.
Collateral and Guarantees
Federal-Mogul, its U.S. subsidiaries and certain of its foreign
subsidiaries, have pledged or are in the process of pledging 100% (or, in the
case of the stock of certain foreign subsidiaries, 65%) of the capital stock of
certain of its subsidiaries and certain intercompany loans to secure the term
loans and revolving credit loans. Part of such collateral also secures certain
of Federal-Mogul's existing public debt and certain other indebtedness, and all
such collateral may be released when Federal-Mogul has obtained investment
grade ratings for its debt or met a certain leverage ratio. In addition, the
U.S. subsidiaries and certain of Federal-Mogul's foreign subsidiaries have
guaranteed the term loans and revolving credit loans and certain other
indebtedness. The stock of certain of Federal-Mogul's other subsidiaries may be
pledged in the future to secure the term loans and the revolving credit loans
and other indebtedness, and one or more of such other subsidiaries may also in
the future guarantee such indebtedness.
Certain Covenants
The Senior Credit Agreement contains certain covenants that restrict or
limit Federal-Mogul from taking various actions, including, subject to
specified exceptions,
. the granting of additional liens,
. the incurrence of additional indebtedness,
. the granting of additional guarantees,
. mergers, acquisitions and other fundamental corporate changes,
. the sale of assets,
. the payment of dividends and other restricted payments,
. the making of investments,
. optional prepayments of certain debt and the modification of debt
instruments,
. entering into sale and leaseback transactions,
. the imposition of restrictions on any subsidiary's ability to make
payments, loans or advances to us
. entering into a new debt agreement with more restrictive covenants and
. transactions with affiliates.
The Senior Credit Agreement also contains certain financial covenants that
require us to meet and maintain certain financial tests and minimum ratios,
including a minimum cash flow coverage ratio, a maximum consolidated leverage
ratio and a minimum consolidated net worth test.
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Events of Default
The Senior Credit Agreement contains customary events of default, including
nonpayment of principal, interest or fees, violation of covenants, inaccuracy
of representations or warranties in any material respect, cross acceleration
and cross default to certain other indebtedness, bankruptcy, noncompliance
with certain provisions of ERISA, material judgments, failure of the
collateral documents or subordination provisions, and change of control. The
occurrence of any of such events could result in acceleration of our
obligations under the Senior Credit Agreement and foreclosure on collateral
securing the term loans and revolving credit loans.
Fees
We currently pay a facility fee on the used and unused portion of each
lender's commitment to make revolving credit loans at the rate of 0.25% to
0.375% per annum, depending on our leverage ratio. In addition, we paid
customary fees to Chase and reimbursed customary expenses in connection with
the closing of the Senior Credit Agreement.
Repayments and Refinancing
We have the option to prepay without premium at any time the term loans and
the revolving credit loans.
DESCRIPTION OF THE NEW NOTES
The Old Notes were and the New Notes offered hereby will be issued under an
indenture (the "Indenture"), dated as of January 20, 1999 by and among
Federal-Mogul, the Guarantors and The Bank of New York, as Trustee (the
"Trustee"). References to the Notes include the New Notes unless the context
otherwise requires. Upon the issuance of the New Notes, if any, or the
effectiveness of a shelf registration statement, the Indenture will be subject
to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
The definitions of certain capitalized terms used in the following summary are
set forth below under "Certain Definitions." For purposes of this section,
references to "Federal-Mogul" include only Federal-Mogul Corporation and not
its subsidiaries.
On January 20, 1999, we issued $1 billion aggregate principal amount of Old
Notes under the Indenture. The terms of the New Notes are identical in all
material respects to the Old Notes, except for certain transfer restrictions
and registration and other rights relating to the exchange of the Old Notes
for New Notes. The Trustee will authenticate and deliver New Notes for
original issue only in exchange for a like principal amount of Old Notes. Any
Old Notes that remain outstanding after the consummation of the exchange
offer, together with the New Notes, will be treated as a single class of
securities under the Indenture. Accordingly, all references herein to
specified percentages in aggregate principal amount of the outstanding New
Notes shall be deemed to mean, at any time after the exchange offer is
completed, such percentage in aggregate principal amount of the Old Notes and
New Notes then outstanding.
General
Principal and interest on the Notes will be payable, the transfer of the
Notes will be registrable, and the Notes may be exchanged or transferred, at
the office or agency of Federal-Mogul maintained for such purpose. The initial
office will be at the corporate trust office of the Trustee located at 101
Barclay Street, New York, New York 10286. However, at our option, payment of
interest may be made by check mailed to the address of the noteholders as such
address appears in the note register. If a noteholder has given wire transfer
instructions to us and our paying agent prior to the applicable record date
for such payment we will make payments with respect to the Notes by wire
transfer of immediately available funds to the account specified by such a
noteholder. No service charge will be made for any registration of transfer or
exchange of Notes, but we may require payment of a sum sufficient to cover any
transfer tax or other similar governmental charge payable in connection
therewith.
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The Notes will be issued in fully registered form without interest coupons,
in denominations of $250,000 and integral multiples of $1,000 in excess
thereof. The Notes will be represented by one or more registered notes in
global form and in certain circumstances may be represented by Notes in
definitive form. For more information, we refer you to "Book Entry; Delivery
and Form."
The 7 3/8% Notes and the 7 1/2% Notes are each referred to herein as a
"series" of Notes.
Certain Terms of the 7 3/8% Notes
The 7 3/8% Notes will be senior obligations of Federal-Mogul and limited to
$400,000,000 aggregate principal amount. The 7 3/8% Notes will mature on
January 15, 2006. The 7 3/8% Notes will not be entitled to the benefit of any
sinking fund.
The 7 3/8% Notes will bear interest at a rate of 7 3/8% from the date of
original issuance, payable on January 15 and July 15 of each year, commencing
January 15, 2000. We will make interest payments to the persons in whose name
the 7 3/8% Notes are registered on the preceding January 1 and July 1,
respectively. Interest will be computed on the basis of a 360-day year
comprised of twelve 30 day months.
Certain Terms of the 7 1/2% Notes
The 7 1/2% Notes will be senior obligations of Federal-Mogul and limited to
$600,000,000 aggregate principal amount. The 7 1/2% Notes will mature on
January 15, 2009. The 7 1/2% Notes will not be entitled to the benefit of any
sinking fund.
The 7 1/2% Notes will bear interest at a rate of 7 1/2% from the date of
original issuance, payable on January 15 and July 15 of each year, commencing
January 15, 2000. We will make interest payments to the persons in whose name
the 7 1/2% Notes are registered on the preceding January 1 and July 1,
respectively. Interest will be computed on the basis of a 360-day year
comprised of twelve 30 day months.
Optional Redemption
We may at our option redeem all or part of the Notes on at least 30 days,
but not more than 60 days, prior notice mailed to the registered address of
each holder of Notes. The redemption price will equal the greater of:
. 100% of the principal amount of the Notes of such series to be redeemed;
or
. the sum of the present values of the Remaining Scheduled Payments for
each series of the Notes discounted to the date of redemption, on a
semiannual basis (assuming a 360-day year consisting of twelve 30 day
months), at the Treasury Rate plus 50 basis points plus, in each case,
accrued interest thereon to the date of redemption.
"Treasury Rate" means an annual rate equal to the semiannual equivalent
yield to maturity of the Comparable Treasury Issue, assuming a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date. The semiannual
equivalent yield to maturity will be computed as of the second business day
immediately preceding such redemption date.
"Comparable Treasury Issue" means the fixed rate United States Treasury
security selected by an Independent Investment Banker as having a maturity most
comparable to the remaining term of the 7 3/8% Notes or the 7 1/2% Notes as the
case may be (and which is not callable prior to maturity) to be redeemed that
would be utilized, at the time of selection and in accordance with customary
financial practices, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of the Notes to be redeemed.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Company.
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"Comparable Treasury Price" means:
(i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on
the third business day preceding such redemption date, as set forth in the
daily statistical release (or any successor release) published by the
Federal Reserve Bank of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Securities"; or
(ii) if such release (or any successor release) is not published or does
not contain such prices on such business day, (A) the average of the
Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest or lowest of such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 3:30 p.m., New York
City time on the third business day preceding such redemption date.
"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Chase Securities Inc., Bear, Stearns & Co. Inc., Credit
Suisse First Boston Corporation, Morgan Stanley & Co. Incorporated and
NationsBanc Montgomery Securities LLC, and their respective successors. If any
of the foregoing shall cease to be a primary U.S. Government securities dealer
in New York City (a "Primary Treasury Dealer"), we will appoint in its place
another nationally recognized investment banking firm that is a Primary
Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to each Note to be
redeemed, the remaining scheduled payments of the principal thereof and
interest thereon that would be due after the related redemption date if such
Note were not redeemed. However, if such redemption date is not an interest
payment date with respect to such Note, the amount of the next succeeding
scheduled interest payment thereon will be reduced by the amount of interest
accrued thereon to such redemption date.
On and after the redemption date, interest will cease to accrue on the Notes
or any portion thereof called for redemption. On or before the redemption date,
we will deposit with a paying agent (or the Trustee) money sufficient to pay
the redemption price of and accrued interest on the Notes to be redeemed on
such date. If less than all of the 7 3/8% Notes or the 7 1/2% Notes, as the
case may be, are to be redeemed, the Trustee will select the Notes to be
redeemed by a method determined by the Trustee to be fair and appropriate.
Ranking
The Notes will rank equally with other existing and future unsubordinated,
unsecured indebtedness of Federal-Mogul. The Notes will rank senior in right of
payment to any future subordinated indebtedness of Federal-Mogul. However, so
long as any indebtedness under the Senior Credit Agreement (or any other credit
agreement renewing, refunding, replacing, restating, refinancing or extending
the Senior Credit Agreement) is secured by shares of capital stock or evidences
of indebtedness of any Restricted Subsidiary (as defined below), the Notes will
also be secured by such collateral.
The Notes benefit from the same collateral provisions as those applicable to
the $1 billion principal amount of notes of Federal-Mogul issued in June 1998.
Indebtedness incurred under the Senior Credit Agreement and certain other
indebtedness of Federal-Mogul are currently secured by pledges of shares of
capital stock of Restricted Subsidiaries as well as by security interests in
other collateral. The Notes will thus be currently secured by such pledges. The
Notes will not have
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the benefit of such other collateral. The Indenture does not contain any
restriction upon indebtedness, whether secured or unsecured, that we and our
subsidiaries may incur in the future. Federal-Mogul's creditors that are
secured by collateral which does not secure the Notes will have a claim on such
other collateral prior to any claims of holders of the Notes against such other
collateral. In the event Indebtedness incurred under the Senior Credit
Agreement (or substitute credit agreement described in the prior paragraph)
ceases for any reason to be secured by the collateral securing the Notes
(including at any time Federal-Mogul has obtained investment grade ratings for
its debt or met a certain leverage ratio), the Notes will also no longer be
secured by such collateral, whether or not Indebtedness incurred under the
Senior Credit Agreement or other Indebtedness is secured by any other
collateral. In such circumstance, the Notes will no longer be secured whether
or not a Default (as defined) or Event of Default (as defined) is then
outstanding for any reason.
As of March 31, 1999, the total amount of indebtedness secured by pledges of
capital stock of Restricted Subsidiaries, which will also secure the Notes, is
$3.342 billion. Of this amount, the total amount of Federal-Mogul's
indebtedness secured by collateral that will not secure the Notes is $1.087
billion.
The Guarantees
Our subsidiaries that have guaranteed indebtedness under the Senior Credit
Agreement will unconditionally guarantee on a joint and several basis all of
our obligations under the Indenture and the Notes. Each of the Guarantees shall
be a guarantee of payment and not of collection. The obligations of each
subsidiary guarantor under its guarantee (each a "Guarantee") are limited to
the maximum amount which can be guaranteed by such subsidiary guarantor without
resulting in the obligations of such subsidiary guarantor constituting a
fraudulent conveyance or fraudulent transfer under applicable federal or state
law. Despite this limitation, there is a risk that the Guarantees will involve
a fraudulent conveyance or transfer, and thus will be unenforceable.
The subsidiary guarantors will consist of the following subsidiaries:
. Federal-Mogul Dutch Holdings Inc., Federal-Mogul Global Inc., Federal-
Mogul U.K. Holdings Inc., F-M UK Holdings Limited, Carter Automotive
Company, Inc., Federal Mogul Venture Corporation, Federal-Mogul World
Wide, Inc., Federal-Mogul Global Properties, Inc., Felt Products Mfg.
Co., Federal-Mogul Ignition Company, Federal-Mogul Products, Inc. and
Federal-Mogul Aviation, Inc. (collectively, the "Guarantors").
Each subsidiary that becomes a guarantor under the Senior Credit Agreement
(or any other credit agreement renewing, refunding, replacing, restating,
refinancing or extending the Senior Credit Agreement), after the date of
the Indenture will become a Guarantor. If a subsidiary that is a Guarantor
ceases to be a guarantor under the Senior Credit Agreement (or substitute
credit agreement described in the prior sentence), such subsidiary will
also cease to be a Guarantor of the Notes, whether or not a Default or
Event of Default is then outstanding. A subsidiary may cease to be a
Guarantor upon sale or other disposal of such subsidiary or otherwise.
Federal-Mogul is not restricted from selling or otherwise disposing of any
of the Guarantors.
In addition to guaranteeing all indebtedness under the Senior Credit
Agreement, each Guarantor has also guaranteed certain other indebtedness,
including our $250,000,000 7 1/2% Notes due July 1, 2004, $400,000,000 7 3/4%
Notes due July 1, 2006, $350,000,000 7 7/8% Notes due July 1, 2010,
$125,000,000 8.8% Senior Notes due 2007 and $125,000,000 aggregate principal
amount of Medium-Term Notes. Certain guarantors of the indebtedness issued
under the Senior Credit Agreement have secured the Senior Credit Agreement
guarantees by pledges of capital stock of their own subsidiaries; some, but not
all, of such pledges may also secure the Notes.
If the Notes are defeased in accordance with the terms of the Indenture,
then the Guarantors will be released and discharged of their obligations under
the Guarantees.
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Certain Covenants
The covenants summarized below will be applicable to the Notes.
Limitation on Liens. The Indenture restricts Federal-Mogul's and its
Restricted Subsidiaries' ability to create or assume, any notes, bonds,
debentures or other similar evidences of Indebtedness secured by any mortgage,
pledge, security interest or lien (any such mortgage, pledge, security interest
or lien being referred to herein as a "Mortgage" or "Mortgages") of or upon
certain assets. If a Mortgage is created or assumed by Federal-Mogul or any
Restricted Subsidiary of or upon any Principal Property owned by Federal-Mogul
or by any Restricted Subsidiary or on shares of capital stock or evidence of
Indebtedness of any Restricted Subsidiary, then as long as such Indebtedness is
secured by the Mortgage, Federal-Mogul will cause all Notes (together with, at
our election, any other Indebtedness) to be secured by such a Mortgage equally
and ratably with (or prior to) any and all other Indebtedness thereby secured.
The foregoing will not apply to any of the following:
. Mortgages on any Principal Property, shares of stock or Indebtedness of
any corporation existing at the time such corporation becomes a
Subsidiary;
. Mortgages on any Principal Property, shares of stock or Indebtedness
acquired, constructed or improved by Federal-Mogul or any Restricted
Subsidiary after the date of the Indenture which are created or assumed
prior to or at the time of such acquisition, construction or improvement
or within 365 days after the acquisition, completion of construction or
improvement or commencement of commercial operation of such property, to
secure or provide for the payment of all or any part of the purchase
price or the cost of such construction or improvement thereof;
. Mortgages on any Principal Property, shares of stock or Indebtedness
existing at the time of acquisition thereof (including acquisition
through merger or consolidation);
. Mortgages on any Principal Property or shares of stock or Indebtedness
acquired from a corporation which is merged with or into Federal-Mogul or
a Restricted Subsidiary;
. Mortgages on any Principal Property, shares of stock or Indebtedness to
secure Indebtedness to Federal-Mogul or to a Restricted Subsidiary;
. Mortgages on any Principal Property, shares of stock or Indebtedness in
favor of the United States of America or any State thereof or The
Commonwealth of Puerto Rico, or any department, agency or instrumentality
or political subdivision of the United States of America or any State
thereof or The Commonwealth of Puerto Rico, to secure partial, progress,
advance or other payments, or to secure any Indebtedness incurred for the
purpose of financing all or any part of the cost of acquiring,
constructing or improving any Principal Property, shares of stock or
Indebtedness subject to such Mortgages (including Mortgages incurred in
connection with pollution control, industrial revenue, Title XI maritime
financings or similar financings), or other Mortgages in connection with
the issuance of tax-exempt industrial revenue bonds;
. Mortgages existing as of the date of the Indenture;
. Mortgages for taxes, assessments or other government charges, the
validity of which is being contested in good faith by appropriate
proceedings and materialmen's, mechanics' and other like Mortgages, or
deposits to obtain the release of such Mortgages;
. Mortgages created or deposits made to secure the payment of workers'
compensation claims or the performance of, or in connection with,
tenders, bids, leases, public or statutory obligations, surety and appeal
bonds, contracts, performance and return-of-money bonds or to secure (or
in lieu of) surety or appeal bonds and Mortgages made in the ordinary
course of business for similar purposes; and
. any extension, renewal or replacement of any Mortgage referred to in the
foregoing nine bullets above. However, such extension, renewal or
replacement shall be limited to the property, shares of stock or
Indebtedness which secured the Mortgage so extended, renewed or replaced
(plus improvements on such property).
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Federal-Mogul or any Restricted Subsidiary may create or assume Mortgages in
addition to those permitted above, and renew, extend or create such Mortgages,
provided, that at the time of such creation, assumption, renewal or
replacement, and after giving effect thereto, the aggregate amount of all
Indebtedness so secured by a Mortgage (without regard to Indebtedness permitted
in the ten bullets above), plus all Attributable Debt of Federal-Mogul and its
Restricted Subsidiaries in respect of Sale and Lease-Back Transactions (as
hereinafter defined) which would not be permitted by either of the first two
bullets of the first paragraph under "--Limitation on Sale and Lease-Back
Transactions," does not exceed 20% of Consolidated Assets.
Limitation on Sale and Lease-Back Transactions. Federal-Mogul will not, nor
will it permit any Restricted Subsidiary to lease any Principal Property owned
by Federal-Mogul or such Restricted Subsidiary (except for leases for a term of
not more than three years), which has been or is to be sold or transferred by
Federal-Mogul or such Restricted Subsidiary on the security of such Principal
Property more than 365 days after the acquisition thereof or the completion of
construction and commencement of full operation thereof (a "Sale and Lease-Back
Transaction"), unless either:
. Federal-Mogul or such Restricted Subsidiary would be entitled pursuant to
the limitation on liens covenant described above to incur Indebtedness
secured by a Mortgage on the Principal Property to be leased back equal
in amount to the Attributable Debt with respect to such Sale and Lease-
Back Transaction without equally and ratably securing the Notes; or
. Federal-Mogul applies an amount equal to the greater of the net proceeds
or the fair value (as determined by our Board of Directors) of the
property so sold to the purchase of Principal Property or to the
retirement (other than any mandatory retirement), within 365 days of the
effective date of any such Sale and Lease-Back Transaction, of Notes or
other Funded Indebtedness. Any such retirement of Notes shall be made in
accordance with the Indenture. The amount to be applied to such
retirement of Notes or other Funded Indebtedness shall be reduced by an
amount equal to the sum of:
-- an amount equal to the principal amount of any Notes delivered within
365 days after the effective date of such Sale and Lease-Back
Transaction to the Trustee for retirement and cancellation, and
-- the principal amount of other Funded Indebtedness voluntarily retired
by Federal-Mogul within such 365-day period, excluding, in each case,
retirements pursuant to mandatory sinking fund or prepayment
provisions and payments at Maturity.
Federal-Mogul or any Restricted Subsidiary may enter into Sale and Lease-
Back Transactions in addition to any permitted by the immediately preceding
paragraph and without any obligation to retire any Notes or other Indebtedness
if at the time of entering into such Sale and Lease-Back Transaction and after
giving effect thereto, Attributable Debt resulting from such Sale and Lease-
Back Transaction, plus the aggregate amount of all Indebtedness secured by a
Mortgage (not including Indebtedness excluded as provided in the first ten
bullets above under "--Limitation on Liens"), does not exceed 20% of
Consolidated Assets.
Certain Definitions
"Attributable Debt," when used in connection with a Sale and Lease-Back
Transaction, shall mean, as of any particular time, the lesser of:
. the fair value (as determined by the Board of Directors) of the property
subject to such arrangement; and
. the then present value (computed by discounting at the Composite Rate) of
the obligation of a lessee for net rental payments during the remaining
term of any lease in respect of such property (including any period for
which such lease has been extended or may, at the option of the lessor,
be extended). The terms "net rental payments" under any lease for any
period means the sum of the rental payments required to be paid in such
period by the lessee thereunder, not including, however, any amounts
required to be paid by such lessee (whether or not designated as rental
or additional rental) on account
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of maintenance and repairs, insurance, taxes, assessments, water rates or
similar charges required to be paid by such lessee thereunder or any
amounts required to be paid by such lessee thereunder contingent upon the
amount of sales, maintenance and repairs, insurance, taxes, assessments,
water rates or similar charges.
"Consolidated Assets" means Federal Mogul's assets, determined in accordance
with GAAP and consolidated for financial reporting purposes in accordance with
GAAP, such assets to be valued at book value.
"Funded Indebtedness" means all of Federal-Mogul's Indebtedness and the
Indebtedness of its Restricted Subsidiaries maturing by its terms more than one
year after, or which is renewable or extendable at our option for a period
ending more than one year after, the date as of which Funded Indebtedness is
being determined.
"GAAP" means such accounting principles as are generally accepted in the
United States at the date of the Indenture.
"Indebtedness" means, without duplication:
. all obligations in respect of borrowed money or for the deferred purchase
or acquisition price of property (including all types of real, personal,
tangible, intangible or mixed property) or services (excluding trade
accounts payable, deferred taxes and accrued liabilities which arise in
the ordinary course of business) which are, in accordance with GAAP,
includible as a liability on a balance sheet consolidated for financial
reporting purposes in accordance with GAAP;
. all amounts representing the capitalization of rental obligations in
accordance with GAAP; and
. all Contingent Obligations with respect to the foregoing.
For purposes of the third bullet above, "Contingent Obligation" means, as
to any Person, any obligation of such Person guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations
("primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent:
-- to purchase any such primary obligation or any property constituting
direct or indirect security therefor;
-- to advance or supply funds (1) for the purchase or payment of any
such primary obligation or (2) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor;
-- to purchase property, securities or services primarily for the
purpose of assuring the beneficiary of any such primary obligation
of the ability of the primary obligor to make payment of such
primary obligation; or
-- otherwise to assure or hold harmless the beneficiary of such primary
obligation against loss in respect thereof;
provided, however, that the term "Contingent Obligation" shall not include the
endorsement of instruments for deposit or collection in the ordinary course of
business. The term "Contingent Obligation" shall also include the liability of
a general partner in respect of the primary obligations of a partnership in
which it is a general partner. The amount of any Contingent Obligation of a
Person shall be deemed to be an amount equal to the principal amount of the
primary obligation in respect to which such Contingent Obligation is made.
"Principal Property" means the principal manufacturing facilities owned by
Federal-Mogul or a Restricted Subsidiary located in the United States, except
such as the Board of Directors, in its good faith opinion, reasonably
determines is not significant to the business, financial condition and earnings
of Federal-Mogul and its consolidated Subsidiaries taken as a whole, as
evidenced by a Board resolution, and except for:
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. any and all personal property including, without limitation, (a) motor
vehicles and other rolling stock, and (b) office furnishings and
equipment and information and electronic data processing equipment;
. any property financed through obligations issued by a state, territory or
possession of the United States, or any political subdivision or
instrumentality of the foregoing; or
. any real property held for development or sale.
"Restricted Subsidiary" means any consolidated Subsidiary that owns any
Principal Property.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by Federal-Mogul or by one or
more other Subsidiaries, or by Federal-Mogul and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
Defeasance and Covenant Defeasance
Federal-Mogul may elect either:
. to defease and be discharged from any and all obligations with respect to
the Notes of any series ("defeasance"); or
. to be released from its obligations with respect to the restrictive
covenants described herein under "--Certain Covenants" with respect to
the Notes of any series ("covenant defeasance").
In order to exercise either defeasance or covenant defeasance:
-- Federal-Mogul must deposit with the Trustee (or other qualifying
trustee), in trust, money and/or Government Obligations which
through the payment of principal and interest in accordance with
their terms will provide money in an amount sufficient, without
reinvestment, to pay the principal of and any premium or interest on
such Notes to Maturity or redemption;
-- Federal-Mogul must deliver to the Trustee an opinion of counsel to
the effect that the holders of such Notes will not recognize income,
gain or loss for United States federal income tax purposes as a
result of such defeasance or covenant defeasance and will be subject
to United States federal income tax on the same amounts and in the
same manner and at the same times as would have been the case if
such deposit, defeasance and discharge had not occurred. Such
opinion of counsel, in the case of defeasance under the first bullet
above, must refer to and be based upon a ruling of the Internal
Revenue Service or a change in applicable United States federal
income tax law occurring after the date of the relevant Indenture.
Federal-Mogul may exercise its defeasance option with respect to such Notes
notwithstanding its prior exercise of its covenant defeasance option. If
Federal-Mogul exercises its defeasance option, payment of such Notes may not be
accelerated because of an Event of Default. If Federal-Mogul exercises its
covenant defeasance option, payment of such Notes may not be accelerated by
reason of a Default or an Event of Default with respect to the covenants to
which such covenant defeasance is applicable. However, if such acceleration
were to occur by reason of another Event of Default, the realizable value at
the acceleration date of the money and Government Obligations in the defeasance
trust could be less than the principal and interest then due on such Notes,
since the required deposit in the defeasance trust is based upon scheduled cash
flow rather than market value, which will vary depending upon interest rates
and other factors.
Payment, Registration, Transfer and Exchange
Payments in respect of the Notes will be made at the office or agency
maintained by us for that purpose as we may designate from time to time.
However, at our option, interest payments on Notes may be made by
check mailed to the address of the person entitled thereto as specified in the
note register. If a holder of Notes
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has given wire transfer instructions to us and our paying agent prior to the
applicable record date for such payment, we will make payments with respect to
the Notes by wire transfer of funds to the account specified by such a
noteholder. Payment of any installment of interest will be made to the person
in whose name such Note is registered at the close of business on the regular
record date for such interest.
The Notes will be transferable or exchangeable at the agency maintained by
us for such purpose as designated by us from time to time. Notes may be
transferred or exchanged without service charge, other than any tax or other
governmental charge imposed in connection therewith.
Consolidation, Merger or Sale by Federal-Mogul
Federal-Mogul shall not consolidate with or merge into any other corporation
or transfer or lease all or substantially all of its assets, unless:
. the corporation formed by such consolidation or into which Federal-Mogul
is merged or the corporation which acquires its assets is organized in
the United States;
. the corporation formed by such consolidation or into which Federal-Mogul
is merged or which acquires its assets expressly assumes all of the
obligations of Federal-Mogul under the Indenture;
. immediately after giving effect to such transaction, no Default or Event
of Default exists; and
. if, as a result of such transaction, Federal-Mogul's properties or assets
would become subject to an encumbrance which would not be permitted by
the terms of the Notes, Federal-Mogul or the successor corporation shall
take such steps as are necessary to secure such Notes equally and ratably
with all indebtedness secured thereunder.
Upon any such consolidation, merger or sale, the successor corporation formed
by such consolidation, or into which Federal-Mogul is merged or to which such
sale is made, shall succeed to, and be substituted for Federal-Mogul under the
Indenture.
Events of Default, Notice and Certain Rights on Default
If an Event of Default occurs with respect to the Notes of any series and is
continuing, the Trustee or the holders of at least 25% in aggregate principal
amount of all of the outstanding Notes of such series, by written notice to us
(and to the Trustee, if notice is given by such holders of Notes), may declare
the principal of, and accrued interest, if any, on all the Notes of such series
to be due and payable.
Events of Default with respect to the Notes of each series are defined in
the Indenture as being:
. default for 30 days in payment of any interest on any Note of such series
when due and payable;
. default in payment of principal, or premium, if any, at maturity or on
redemption or otherwise of any Notes of such series when due;
. default for 60 days after notice to us by the Trustee, or to us and the
Trustee by the holders of at least 25% in aggregate principal amount of
the Notes of such series then outstanding, in the performance of any
covenant with respect to the Notes of such series;
. default with respect to other indebtedness of Federal-Mogul for borrowed
money in an aggregate principal amount of at least $25 million, which
default shall constitute a failure to pay any portion of the principal
when due and payable after the expiration of an applicable grace period
with respect thereto or shall result in an acceleration thereof and such
acceleration is not rescinded or annulled or such debt shall not be paid
in full within 30 days after the written notice thereof to us by the
Trustee or to us and the Trustee by the holders of 25% in aggregate
principal amount of the Notes of such series then outstanding, provided
that such Event of Default will be remedied, cured or waived if such
default under such other agreement is remedied, cured or waived; and
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. certain events of bankruptcy, insolvency or reorganization of Federal-
Mogul.
The definition of "Event of Default" in the Indenture specifically excludes a
default under a secured debt under which the obligee has recourse (exclusive of
recourse for ancillary matters such as environmental indemnities,
misapplication of funds, costs of enforcement, etc.) only to the collateral
pledged for repayment, and where the fair market value of such collateral does
not exceed two percent of Total Assets (as defined in the Indenture) at the
time of the default.
The Trustee will, within 90 days after the occurrence of a Default with
respect to the Notes of any series, give to the holders of the Notes of such
series notice of all Defaults known to it unless such Default shall have been
cured or waived. However, the Trustee may withhold the notice (except in the
case of a Default in payment on the Notes of such series) if and so long as it
determines in good faith that withholding such notice is in the interests of
the holders of the Notes of such series. "Default" means any event which is, or
after notice or passage of time or both, would be, an Event of Default.
The holders of a majority in aggregate principal amount of the Notes of each
series affected (with each series voting as a class) may, subject to certain
limited conditions, direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on such Trustee.
We will file annually with the Trustee a certificate as to our compliance
with all conditions and covenants of such Indenture.
The holders of a majority in aggregate principal amount of Notes of any
series then outstanding, by notice to the Trustee may waive, on behalf of the
holders of all Notes of such series, any past Default or Event of Default with
respect to such series and its consequences except (i) a Default or Event of
Default in the payment of the principal of, premium, if any, or interest, if
any, on any Note of such series, or (ii) an Event of Default resulting from the
breach of a covenant or provision of the Indenture which, pursuant to the
Indenture, cannot be amended or modified without the consent of the holder of
each outstanding Note of such series.
Modification of the Indentures
The Indenture may be modified without the consent of the holders of any of
the Notes in order:
. to evidence the succession of another corporation to Federal-Mogul and
the assumption of the covenants and its obligations by a successor to
Federal-Mogul;
. to add to Federal-Mogul's covenants or to surrender any of its rights or
powers;
. to add additional Events of Default with respect to any series of the
Notes;
. to add, change or eliminate any provision affecting only Notes not yet
issued;
. to secure the Notes;
. to establish the form or terms of Notes;
. to evidence and provide for successor Trustees;
. if allowed without penalty under applicable laws and regulations, to
permit payment in respect of Notes in bearer form in the United States;
. to correct any defect or supplement any inconsistent provisions or to
make any other provisions with respect to matters or questions arising
under such Indenture, provided that such action does not adversely affect
the interests of the holders of Notes affected thereby;
. to cure any ambiguity or correct any mistake;
. to add a Guarantor, or remove a Guarantor in respect of any series which,
in accordance with the terms of the Indenture, is no longer liable on its
Guarantee; or
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. to provide for the issuance of the exchange securities of any series.
The Indenture also may be modified, with the consent of the holders of a
majority in aggregate principal amount of the outstanding Notes of any series
affected thereby (with Notes of each series voting as a class), except that,
without the consent of the holder of each Note affected thereby, no such
supplemental indenture may:
. change the time for payment of principal or premium, if any, or interest,
if any, on any Note;
. reduce the principal of, or the rate of interest, or premium, if any, on
any Note, or change the manner in which the amount of any of the
foregoing is determined;
. reduce the amount of premium, if any, payable upon the redemption of any
Note;
. impair the right to institute suit for the enforcement of any payment on
or with respect to any Note;
. reduce the percentage in principal amount of the outstanding Notes
affected thereby, the consent of whose holders is required for
modification or amendment of such Indenture or for waiver of compliance
with certain provisions of the Indenture or for waiver of certain
defaults;
. change our obligation to maintain an office or agency in the places and
for the purposes specified in such Indenture; or
. modify the provisions relating to waiver of certain defaults or any of
the foregoing provisions.
The Trustee
We may maintain banking and other commercial relationships with the Trustee.
Governing Law
The Notes and the Indenture will be governed by and construed in accordance
with the laws of the State of New York.
BOOK-ENTRY; DELIVERY AND FORM
Except as described below under "--Certificated Notes", the New Notes issued
in exchange for the Old Notes currently represented by one or more fully
registered global notes will be represented by one or more permanent global
certificates in definitive, fully registered form (the "Global Notes"). The
Global Notes will be deposited upon issuance with, or on behalf of, The
Depository Trust Company ("DTC").
The Old Notes were offered and sold solely (i) to "qualified institutional
buyers," as defined in Rule 144A under the Securities Act ("QIBs"), pursuant to
Rule 144A (ii) in offshore transactions to persons other than "U.S. persons,"
as defined in Regulation S under the Securities Act ("Non-U.S. Persons"), in
reliance on Regulation S and (iii) to institutional "accredited investors," as
defined in Rule 501 (a)(1), (2), (3) and (7) under the Securities Act of 1933
("Institutional Accredited Investors"), that were not QIBs.
The Old Global Notes
Rule 144A Global Notes. The Old Notes offered and sold to QIBs pursuant to
Rule 144A were issued in the form of one global note, without interest coupons
(each, a "Rule 144A Global Note"). The Rule 144A Global Note of each series
were deposited on the date of the closing of the sale of the Old Notes with, or
on behalf of, DTC and registered in the name of Cede & Co., as nominee of DTC.
The Rule 144A Global Note remains in the custody of the Trustee pursuant to the
Balance Certificate Agreement between DTC and the Trustee.
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Regulation S Global Notes. The Old Notes offered and sold in offshore
transactions to Non-U.S. Persons in reliance on Regulation S were issued in the
form of a global note without interest coupons (each, a "Regulation S Temporary
Global Note"). Beneficial interests in the Regulation S Temporary Global Note
for each series are exchanged for beneficial interests in a corresponding
permanent global note (each, a "Regulation S Permanent Global Note" and
together with the Regulation S Temporary Global Note, the "Regulation S Global
Notes" for such series) (i) within a reasonable period after the 40th day after
the later of the commencement of the offering of the Old Notes and the closing
date of the offering of the Old Notes and (ii) upon certification that the
beneficial interests in the Regulation S Temporary Global Note are owned by
either Non-U.S. Persons or U.S. persons who purchased such interests pursuant
to an exemption from, or in transactions not subject to, the registration
requirements of the Securities Act of 1933.
Each Regulation S Global Note was deposited upon issuance with a custodian
for DTC in the manner described in the preceding paragraph for credit to the
respective accounts of the purchasers at Morgan Guaranty Trust Company of New
York, Brussels Office, as operator of the Euroclear System ("Euroclear"), or
Cedel Bank, societe anonyme ("Cedel").
Investors may hold their interests in each Regulation S Global Note directly
through Euroclear or Cedel, if they are participants in such systems,
indirectly through organizations that are participants in such systems or
through organizations other than Euroclear or Cedel that are participants in
the DTC system. Euroclear and Cedel will hold such interests in the Regulation
S Global Note on behalf of their participants through customers' securities
accounts in their respective names on the books of the respective depositaries.
Such depositaries, in turn, will hold such interests in the Regulation S Global
Note in customers' securities accounts in the depositaries' names on the books
of DTC.
The New Global Notes
Except as set forth below, the Global Notes may be transferred, in whole and
not in part, solely to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for
Notes in physical, certificated form except in the limited circumstances
described below. The New Notes will be freely transferrable and will not bear a
restrictive legend.
All interests in the Global Notes, including those held through Euroclear or
Cedel, may be subject to the procedures and requirements of DTC. Those
interests held through Euroclear or Cedel may also be subject to the procedures
and requirements of such systems.
Certain Book-Entry Procedures for the Global Notes
The descriptions of the operations and procedures of DTC, Euroclear and
Cedel set forth below are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to change by them from time to time. Neither
Federal-Mogul, nor any initial purchaser takes any responsibility for these
operations, and you are urged to contact the relevant system or its
participants directly to discuss these matters.
DTC
DTC has advised us that it is:
. a limited purpose trust company organized under the laws of the State of
New York,
. a "banking organization" within the meaning of the New York Banking Law,
. a member of the Federal Reserve System,
. a "clearing corporation" within the meaning of the Uniform Commercial
Code, as amended, and
. a "clearing agency" registered pursuant to Section 17A of the Exchange
Act.
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DTC was created to hold securities for its participants and facilitate the
clearance and settlement of securities transactions between DTC participants
through electronic book-entry changes in the accounts of its participants,
thereby eliminating the need for physical transfer and delivery of
certificates. DTC's participants include securities brokers and dealers
(including the initial purchasers of the Old Notes), banks and trust companies,
clearing corporations and certain other organizations. Indirect access to DTC's
system is also available to other entities such as banks, brokers, dealers and
trust companies (collectively, the "Indirect Participants") that clear through
or maintain a custodial relationship with a DTC participant, either directly or
indirectly. Investors who are not DTC participants may beneficially own
securities held by or on behalf of DTC only through DTC participants or
Indirect Participants.
Cedel
Cedel advises that it is incorporated under the laws of Luxembourg as a
professional depositary. Cedel holds securities for its participating
organizations and facilitates the clearance and settlement of securities
transactions between Cedel participants through electronic book-entry changes
in accounts of Cedel participants, thereby eliminating the need for physical
movement of certificates. Cedel provides to Cedel participants, among other
things, services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing. Cedel
interfaces with domestic markets in several countries. As a professional
depositary, Cedel is subject to regulation by the Luxembourg Monetary
Institute. Cedel participants are recognized financial institutions around the
world, including underwriters, securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations and may
include the initial purchasers. Indirect access to Cedel is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Cedel participant either directly
or indirectly.
Euroclear
Euroclear advises that it was created to hold securities for participants of
Euroclear and to clear and settle transactions between Euroclear participants
through simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk for
lack of simultaneous transfers of securities and cash. Euroclear includes
various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries. Euroclear is operated by
the Brussels, Belgium office of Morgan Guaranty Trust Company of New York (the
"Euroclear Operator"), under contract with Euro-clear Clearance Systems S.C., a
Belgian cooperative corporation (the "Cooperative"). All operations are
conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for Euroclear on behalf
of Euroclear participants. Euroclear participants include banks (including
central banks), securities brokers and dealers and other professional financial
intermediaries and may include the initial purchasers of the Old Notes.
Indirect access to Euroclear is also available to other firms that clear
through or maintain a custodial relationship with a Euroclear participant,
either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities
and cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
the Euroclear participants, and has no record of or relationship with persons
holding through Euroclear participants.
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Book-Entry System
We expect that pursuant to procedures established by DTC;
. upon deposit of each Global Note, DTC will credit the accounts of DTC
participants designated by the initial purchasers with an interest in the
Global Note; and
. ownership of the Notes will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by DTC (with
respect to the interests of DTC participants) and the records of DTC
participants and the Indirect Participants (with respect to the interests
of persons other than DTC participants).
The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form. The
ability to transfer interests in the Notes represented by a Global Note to such
persons may be limited. In addition, because DTC can act only on behalf of DTC
participants, the ability of a person having an interest in Notes represented
by a Global Note to pledge or transfer such interest to persons or entities
that do not participate in DTC's system may be affected by the lack of a
physical definitive security in respect of such interest.
So long as DTC or its nominee is the registered owner of a Global Note, DTC
or such nominee will be considered the sole record owner or holder of the Notes
represented by the Global Note for all purposes under the Indenture and the
Notes. Except as provided below, owners of beneficial interests in a Global
Note:
. will not be entitled to have Notes represented by such Global Note
registered in their names;
. will not be entitled to receive physical delivery of certificated notes;
and
. will not be considered the owners or holders thereof under the Indenture
for any purpose, including with respect to the giving of any direction,
instruction or approval to the Trustee thereunder.
Each holder owning a beneficial interest in a Global Note must rely on the
procedures of DTC and on the procedures of the DTC participants to exercise any
rights of a holder of Notes.
Under current industry practice, in the event that Federal-Mogul requests
any action of holders of Notes, or in the event that an owner of a beneficial
interest in a Global Note desires to take any action that DTC, as holder of
such Global Note, is entitled to take, DTC would authorize the DTC participants
to take such action and the DTC participants would authorize holders owning
through such DTC participants to take such action or would otherwise act upon
the instruction of such holders. Neither Federal-Mogul nor the Trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of Notes by DTC, or for maintaining, supervising or
reviewing any records of DTC relating to such Notes.
Payments with respect to the principal of, and premium, if any, and interest
on any Notes represented by a Global Note registered in the name of DTC or its
nominee on the applicable record date will be payable by the Trustee to or at
the direction of DTC or its nominee, in its capacity as the registered holder
of the Global Note representing such Notes. Federal-Mogul and the Trustee may
treat the persons in whose names the Notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving payment thereon
and for any and all other purposes whatsoever. Accordingly, neither Federal-
Mogul nor the Trustee has or will have any responsibility or liability for the
payment of such amounts to owners of beneficial interests in a Global Note
(including principal, premium, if any, and interest). Federal-Mogul expects
that DTC or its nominee, upon receipt of any payment of principal of, premium,
if any, and interest in respect of the Global Notes will credit DTC
participants' accounts with payments in amounts proportionate to their
respective beneficial ownership interests in the principal amount of such
Global Note, as shown on the records of DTC or its nominee. We also expect that
payments by the DTC participants and the Indirect Participants to the owners of
beneficial interests in a Global Note will be governed by standing instructions
and customary industry practice and will be the responsibility of DTC
participants or the Indirect Participants and DTC.
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Transfers between DTC participants will be effected in accordance with DTC's
procedures, and will be settled in same-day funds. Transfers between Euroclear
participants or Cedel participants will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the Old
Notes, cross-market transfers between the DTC participants, on the one hand,
and Euroclear participants or Cedel participants, on the other hand, will be
effected through DTC in accordance with the DTC's rules on behalf of Euroclear
or Cedel, as the case may be, by its respective depositary. However, such
cross-market transactions will require delivery of instructions to Euroclear or
Cedel by the counterparty in such system in accordance with the rules and
procedures and within the established deadlines (Brussels time) of such system.
Euroclear or Cedel will, if the transaction meets its settlement requirements,
deliver instructions to its respective depositary to take action to effect
final settlement on its behalf by delivering or receiving interests in the
relevant Global Notes in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC.
Euroclear participants and Cedel participants may not deliver instructions
directly to the depositaries for Euroclear or Cedel.
Because of time zone differences, the securities account of a Euroclear
participant or Cedel participant in an interest in a Global Note from a DTC
participant will be credited, and any such crediting will be reported to the
relevant Euroclear participant or Cedel participant, during the securities
settlement processing day (which must be a business day for Euroclear and
Cedel) immediately following the DTC settlement date. Cash received in
Euroclear or Cedel as a result of sales of interest in a Global security by or
through a Euroclear participant or Cedel participant to a DTC participant will
be received for value on the settlement date of DTC but will be available in
the relevant Euroclear or Cedel cash account only as of the business day for
Euroclear or Cedel following DTC's settlement date.
DTC has advised us that DTC will take any action permitted to be taken by a
holder of Notes (including the presentation of Notes for exchange as described
below) only at the direction of one or more DTC participants to whose account
the DTC interests in the Global Notes are credited and only in respect of such
portion of the aggregate principal amount of Notes as to which such DTC
participant or DTC participants has or have given such direction. However, if
there is an Event of Default under the Indenture, DTC will exchange the Global
Notes for certificated notes.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures to
facilitate transfers of interests in the in the Global Notes among participants
in DTC, Euroclear and Cedel, they are under no obligation to perform or to
continue to perform such procedures, and such procedures may be discontinued at
any time. Neither Federal-Mogul nor the Trustee will have any responsibility
for the performance by DTC, Euroclear or Cedel or their respective participants
or indirect participants of their respective obligations under the rules and
procedures governing their operations.
Certificated Notes
If:
. we notify the Trustee in writing that DTC is no longer willing or able to
act as a depositary or DTC ceases to be registered as a clearing agency
under the Exchange Act of 1934 and a depositary is not appointed within
90 days of such notice or cessation;
. we at our option notify the Trustee in writing that we elect to cause the
issuance of Notes of any series in definitive form under the Indenture;
or
. upon the occurrence of certain other events as provided in the Indenture;
then, upon surrender by DTC of the Global Notes of any series, certificated
notes will be issued to each person that DTC identifies as the beneficial owner
of the Notes represented by the Global Notes of such series. Upon any issuance,
the Trustee is required to register such certificated notes in the name of such
person or persons and cause the same to be delivered thereto.
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New Notes issued in exchange for Old Notes that were originally purchased by
or transferred to Institutional Accredited Investors who are not QIBs will be
in registered form without interest coupons. Upon the transfer to a QIB or Non-
U.S. Person, such certificated notes will, unless the Global Notes have been
previously exchanged for certificated notes, be exchanged for an interest in
the Global Note representing the principal amount of Notes being transferred.
Neither we nor the Trustee shall be liable for any delay by DTC or any DTC
participant or Indirect Participant in identifying the beneficial owners of the
related Notes and each such person may conclusively rely on, and shall be
protected in relying on, instructions from DTC for all purposes (including with
respect to the registration and delivery, and the respective principal amounts,
of the Notes to be issued).
MATERIAL FEDERAL TAX CONSIDERATIONS
The following is a summary of the material United States federal income tax
consequences from the exchange offer and from the ownership of the New Notes.
It deals only with New Notes held as capital assets and not with special
classes of noteholders, such as dealers in securities or currencies, life
insurance companies, tax exempt entities, and persons that hold a New Note in
connection with an arrangement that completely or partially hedges the New
Note. Further, the discussion does not address all aspects of taxation that
might be relevant to particular noteholders in light of their individual
circumstances. The discussion is based upon the Internal Revenue Code of 1986,
as amended (the "Code"), and regulations, rulings and judicial decisions
thereunder as of the date hereof. Such authorities may be repealed, revoked or
modified so as to produce federal income tax consequences different from those
discussed below.
Except as the context otherwise requires, reference in this section to the
Notes shall apply to both the Old Notes and the New Notes.
For purposes of the following discussion, a "United States Holder" means a
beneficial owner of a Note who or which is, for United States federal income
tax purposes: (1) a citizen or resident of the United States; (2) a
partnership, corporation or other entity created or organized in or under the
law of the United States or of any State of the United States; (3) an estate,
the income of which is subject to United States federal income tax regardless
of its source; (4) a trust classified as a United States person for United
States federal income tax purposes. A "United States Alien Holder" is a
beneficial owner of a Note that, for United States federal income tax purposes,
is not a United States Holder.
Noteholders tendering their Old Notes or prospective purchasers of New Notes
should consult their own tax advisors concerning the United States federal
income tax and any state or local income or franchise tax consequences in their
particular situations and any consequences under the laws of any other taxing
jurisdiction.
Exchange of Old Notes for New Notes
The exchange of Old Notes for New Notes pursuant to the exchange offer will
not be treated as an "exchange" for United States federal income tax purposes
because the New Notes will not be considered to differ materially in kind or
extent from the Old Notes. Rather, the New Notes received by a noteholder will
be treated as a continuation of the Old Notes in the hands of such noteholders.
The adjusted basis and holding period of the New Notes for any noteholder will
be the same as the adjusted basis and holding period of the Old Notes.
Similarly, there will be no United States federal income tax consequences to a
holder of Old Notes that does not participate in the exchange offer.
Payments of Interest
Payments of stated interest on a New Note generally will be taxable to a
United States Holder as ordinary interest income at the time it is received or
accrued, depending on the United States Holder's method of accounting for tax
purposes.
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Sale, Exchange, Redemption or Retirement
Upon the sale, exchange, redemption or retirement of a Note, a United States
Holder will recognize taxable gain or loss equal to the difference between the
amount realized on such sale, exchange, redemption or retirement (not including
any amount attributable to accrued but unpaid interest not previously included
in gross income) and such Holder's adjusted tax basis in the Note. To the
extent attributable to accrued but unpaid interest not previously included in
gross income, the amount recognized by the United States Holder will be treated
as a payment of interest. See "--Payments of Interest" above. Gain or loss
recognized on the sale, exchange, redemption or retirement generally will be
capital gain or loss. The deductibility of capital losses is subject to
limitations.
Market Discount and Premium
United States Holders that did not acquire their interest in the New Notes
pursuant to an acquisition of Old Notes on their original issue at their
original offering price or pursuant to an exchange of such Old Notes for New
Notes pursuant to the exchange offer may be considered to have acquired their
New Notes with market discount or amortizable bond premium as such terms are
defined for United States federal income tax purposes. Such Holders should
consult their tax advisors as to the federal income tax consequences of the
market discount and premium rules of the Code.
Tax Consequences to United States Alien Holders
Under present United States federal income tax law, and subject to the
discussion below concerning backup withholding:
(a) payments of principal and interest on a Note by us or any paying
agent to a United States Alien Holder will not be subject to withholding of
United States federal income tax, provided that, in the case of interest,
(i) such Holder does not own, actually or constructively, 10 percent or
more of the total combined voting power of all classes of our stock
entitled to vote, (ii) such Holder is not, for United States federal income
tax purposes, a controlled foreign corporation related, directly or
indirectly, to us through stock ownership, (iii) such Holder is not a bank
receiving interest described in Section 881(c)(3)(A) of the Code, and (iv)
the certification requirements under Section 871(h) or Section 881(c) of
the Code and Treasury Regulations thereunder (summarized below) are met;
and
(b) a United States Alien Holder of a Note will not be subject to United
States federal income tax on gain recognized on the sale, exchange,
redemption, retirement or other disposition of such Note, unless (i) such
Holder is a non-resident alien individual who is present in the United
States for 183 days or more in the taxable year of disposition, and certain
conditions are met or (ii) such gain is effectively connected with the
conduct by such Holder of a trade or business in the United States.
Sections 871(h) and 881(c) of the Code and United States Treasury
Regulations thereunder require that, in order to obtain the exemption from
withholding tax described in paragraph (a) above, either (A) the beneficial
owner of a Note must certify, under penalties of perjury, to us or our paying
agent, as the case may be, that such owner is a United States Alien Holder and
must provide such owner's name and address, or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution") and holds the Note on behalf of the beneficial owner thereof must
certify, under penalties of perjury, to us or our paying agent, as the case may
be, that such certificate has been received from the beneficial owner by it or
by a Financial Institution between it and the beneficial owner and must furnish
the payor with a copy thereof. A certificate described in this paragraph is
effective only with respect to payments of interest made to the certifying
United States Alien Holder after issuance of the certificate in the calendar
year of its issuance and the two immediately succeeding calendar years. Under
temporary United States Treasury Regulations, the foregoing certification may
be provided by the beneficial owner of a Note on Internal Revenue Service Form
W-8.
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On October 14, 1997, the Internal Revenue Service published in the Federal
Register final regulations (the "1997 Final Regulations"), which affect the
United States taxation of United States Alien Holders. The 1997 Final
Regulations are currently expected to be effective for payments after December
31, 2000, regardless of the issue date of the instrument with respect to which
such payments are made, subject to certain transition rules. The discussion
under this heading and under "Backup Withholding and Information Reporting,"
below, is not intended to be a complete discussion of the provisions of the
1997 Final Regulations, and Holders are urged to consult their tax advisors
concerning the tax consequences of their acquiring, holding and disposing of
the Notes in light of the 1997 Final Regulations.
The 1997 Final Regulations provide documentation procedures designed to
simplify compliance by withholding agents. The 1997 Final Regulations generally
do not affect the documentation rules described above, but add other
certification options. Under one such option, a withholding agent will be
allowed to rely on an intermediary withholding certificate furnished by a
"qualified intermediary" (as defined below) on behalf of one or more beneficial
owners (or other intermediaries) without having to obtain the beneficial owner
certificate described above. "Qualified intermediaries" include: (i) foreign
financial institutions or foreign clearing organizations (other than a United
States branch or United States office of such institution or organization) or
(ii) foreign branches or offices of United States financial institutions or
foreign branches or offices of United States clearing organizations, which, as
to both (i) and (ii), have entered into withholding agreements with the
Internal Revenue Service. In addition to certain other requirements, qualified
intermediaries must obtain withholding certificates, such as revised Internal
Revenue Service Form W-8 (see below), from each beneficial owner. Under another
option, an authorized foreign agent of a United States withholding agent will
be permitted to act on behalf of the United States withholding agent, provided
certain conditions are met.
For purposes of the certification requirements, the 1997 Final Regulations
generally treat, as the beneficial owners of payments on a debt instrument,
those persons that, under United States tax principles, are the taxpayers with
respect to such payments, rather than persons such as nominees or agents
legally entitled to such payments. In the case of payments to an entity
classified as a foreign partnership under United States tax principles, the
partners, rather than the partnership, generally will be required to provide
the required certifications to qualify for the withholding exemption described
above. A payment to a United States partnership, however, is treated for these
purposes as payment to a United States payee, even if the partnership has one
or more foreign partners. The 1997 Final Regulations provide certain
presumptions with respect to withholding for holders of debt instruments not
furnishing the required certifications to qualify for the withholding exemption
described above. In addition, the 1997 Final Regulations will replace a number
of current tax certification forms (including Internal Revenue Service Form W-8
and Internal Revenue Service Form 4224, discussed below) with a new Internal
Revenue Service Form W-8 series of tax certification forms (which, in certain
circumstances, requires information in addition to that previously required).
These new forms are currently available and may be used in lieu of the current
Internal Revenue Service Forms W-8 and 4224. Under the 1997 Final Regulations,
this Form W-8 will remain valid until the last day of the third calendar year
following the year in which the certificate is signed.
If a United States Alien Holder of a Note is engaged in a trade or business
in the United States, and if interest on the Note, or gain recognized on the
sale, exchange, redemption, retirement or other disposition of the Note, is
effectively connected with the conduct of such trade or business, the United
States Alien Holder, although exempt from withholding of United States income
tax, will generally be subject to regular United States income tax on such
interest or gain in the same manner as if it were a United States Holder. In
lieu of the certificate described above, such a Holder must provide to the
withholding agent a properly executed Internal Revenue Service Form 4224 or W-
8ECI (or successor form) in order to claim an exemption from withholding. In
addition, if such United States Alien Holder is a foreign corporation, it may
be subject to a branch profits tax equal to 30% (or such lower rate provided by
an applicable treaty) of its effectively connected earnings and profits for the
taxable year, subject to certain adjustments.
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Backup Withholding and Information Reporting
Information reporting to the Internal Revenue Service generally will be
required with respect to payments of principal or interest on the Notes and to
proceeds of the sale of the Notes that, in each case, are paid by a United
States payor or intermediary to United States Holders other than corporations
and other exempt recipients. A 31% "backup" withholding tax will apply to those
payments if such United States Holder fails to provide certain identifying
information (such as such Holder's taxpayer identification number) to such
payor or intermediary or such Holder is notified by the Internal Revenue
Service that it has failed to report all interest and dividends required to be
shown on its United States federal income tax returns. United States Alien
Holders may be required to comply with applicable certification procedures to
establish that they are not United States Holders in order to avoid the
application of such information reporting requirements and backup withholding.
Backup withholding tax is not an additional tax and generally may be credited
against a Holder's United States federal income tax liability provided that
such Holder provides the necessary information to the Internal Revenue Service.
PLAN OF DISTRIBUTION
This prospectus, as it may be amended or supplemented from time to time, may
be used by a broker-dealer (a "Participating Broker-Dealer") in connection with
the resale of the New Notes received in exchange for the Old Notes where such
Old Notes were acquired for its own account as a result of market-making
activities or other trading activities. Each such Participating Broker-Dealer
that participates in the exchange offer that receives the New Notes for its own
account pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. We have agreed that
for a period of 180 days after the date when the registration statement becomes
effective, we will use our best efforts to make this prospectus, as amended or
supplemented, available to any Participating Broker-Dealer for use in
connection with any such resale.
We will not receive any proceeds from any sale of New Notes by Participating
Broker-Dealers. New Notes received by Participating Broker-Dealers for their
own account pursuant to the exchange offer may be sold from time to time in one
or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options of the New Notes or a combination
of such methods of resale, at market prices prevailing at the time of resale,
at prices related to such prevailing market prices or negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any Participating Broker-Dealer and/or the purchases of any such New
Notes. Any Participating Broker-Dealer that resells New Notes that were
received by it for its own account pursuant to the exchange offer and any
broker or dealer that participates in a distribution of such New Notes may be
deemed to be an "underwriter" within the meaning or the Securities Act of 1933
and any profit on any such resale of New Notes and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act of 1933. The letter of transmittal states
that by acknowledging that it will deliver and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act of 1933.
For a period of 180 days after the expiration date of the exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any Participating Broker-Dealer that requests
such documents in the letter of transmittal.
This prospectus has been prepared for use in connection with the exchange
offer and may be used by the initial purchasers in connection with the offers
and sales related to market-making transactions in the New Notes. The initial
purchasers may act as principals or agents in such transactions. Such sales
will be made at prices related to prevailing market prices at the time of sale.
We will not receive any of the proceeds of such sales. The initial purchasers
have no obligation to make a market in the New Notes and may discontinue their
market-making activities at any time without notice, at their sole discretion.
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INCORPORATION OF INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with
the SEC. This permits us to disclose important information to you by
referencing these filed documents. Any information referenced this way is
considered part of this prospectus, and any information filed with the SEC
subsequent to this prospectus will automatically update and, where applicable,
supersede any information previously incorporated by reference and listed
below. We incorporate by reference the following documents that have been filed
with the SEC:
. Annual Report on Form 10-K for the year ended December 31, 1998;
. Quarterly Reports on Form 10-Q for the quarter ended March 31, 1999;
. Proxy statement for the 1998 Annual Shareholders' Meeting, filed on March
24, 1999; and
. Current reports on Form 8-K filed on April 7, 1998 and November 24, 1998.
This prospectus incorporates documents by reference which are not part of or
delivered with this document. These documents (not including exhibits to such
documents, unless such exhibits are specifically incorporated by reference in
such documents) are available without charge upon written or oral request
directed to: David M. Sherbin, Esq., Associate General Counsel and Secretary,
Federal-Mogul Corporation, 26555 Northwestern Highway, Southfield, Michigan
48034 (telephone: (248) 354-7700).
LEGAL MATTERS
The validity of securities being offered hereby will be passed upon for us
by David M. Sherbin, Esq., Associate General Counsel and Secretary of Federal-
Mogul. Mr. Sherbin owns and holds options to purchase approximately 3,200
shares of our common stock.
EXPERTS
The consolidated financial statements and schedule of Federal-Mogul for each
of the three years in the period ended December 31, 1998 and the consolidated
financial statements of Federal-Mogul Ignition Company and Federal-Mogul
Products, Inc. and the financial statements of Federal-Mogul Aviation, Inc.,
all of which are incorporated by reference in this document from Federal-
Mogul's Form 10-K for 1998, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports and incorporated in this document by
reference. The consolidated financial statements and schedule audited by Ernst
&Young LLP are incorporated in this document by reference in reliance on such
reports given upon the authority of the firm as experts in accounting and
auditing.
The consolidated financial statements of T&N for the three years in the
period ended December 31, 1997 incorporated by reference in this document have
been audited by KPMG Audit Plc, independent auditors, as set forth in their
reports and incorporated in this document by reference. The consolidated
financial statements audited by KPMG Audit Plc are incorporated in this
document by reference in reliance on their report given on their authority as
experts in accounting and auditing.
The financial statements of Fel-Pro as of December 28, 1997 and December 29,
1996 for the three years in the period ended December 28, 1997 incorporated by
reference in this document have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports and incorporated by reference in this
document. The financial statements audited by Ernst & Young LLP are
incorporated in this document by reference in reliance on such report given
upon the authority of the firm as experts in accounting and auditing.
The financial statements of the automotive divisions of Cooper Industries,
Inc. for the combined financial position as of December 31, 1996 and 1997 and
combined results of operations and cash flows for each of the three years in
the period ended December 31, 1997 incorporated by reference in this document
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports and incorporated by reference in this document. The financial
statements audited by Ernst & Young LLP are incorporated in this document by
reference in reliance on such report given upon the authority of the firm as
experts in accounting and auditing.
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[Logo of Federal Mogul]
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PROSPECTUS
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Offer To Exchange 7 3/8% Notes due 2006
For Any and All Outstanding 7 3/8% Notes due 2006
and 7 1/2% Notes due 2009
For Any and All Outstanding 7 1/2% Notes due 2009
Dated July 14, 1999
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this prospectus in connection with the offer
contained in the prospectus and, if given or made, the information or
representations must not be relied upon. This prospectus is not an offer to
sell, nor do they seek an offer to buy, these securities in any jurisdiction in
which the offer or sale is not permitted.
Until October 12, 1999, all dealers that effect transactions in these
securities, whether or not participating in this exchange offer, may be
required to deliver a prospectus.
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