After more than six years of legal and financial strife, supplier Federal-Mogul Corp. exited Chapter 11 protection today, ending one of the longest and most expensive bankruptcy reorganizations in auto history.
The company said on Dec. 18 that it would announce its rise out of court protection today. A company spokeswoman confirmed the company officially emerged late this afternoon. A disclosure was filed with the U.S. Securities and Exchange Commission, she said.
The suburban Detroit supplier sought court protection in October 2001 after a flurry of lawsuits resulting from auto parts that contained asbestos. The parts were made by companies acquired by Federal-Mogul in the 1990s.
The final price tag for the company's bankruptcy litigation has not been determined, but a year ago the tally had topped $500 million. Through September, the company had spent another $39.4 million on its bankruptcy restructuring efforts.
Federal-Mogul will have a new private-equity stakeholder when it begins operating outside of court protection.
Billionaire investor Carl Icahn paid about $775 million for Federal-Mogul unsecured debt that could be converted to 43 percent of the company's equity. Icahn has not publicly indicated his plans or goals for the Federal-Mogul investment.
This year Icahn made an unsuccessful bid to acquire automotive seating and electronics giant Lear Corp.
Meanwhile, Federal-Mogul CEO Jose Maria Alapont has focused the company's core business on pistons and rings, bearings seals, oil pumps, spark plugs and 300-plus individual engine parts to dominate the powertrain business. Federal-Mogul maintains a wide variety of customers, with no one company accounting for more than 7 percent of its business.
The company is now profitable.
Through September, Federal-Mogul said it posted net income of $22.2 million on revenue of $5.16 billion compared with a net loss of $82.6 million on revenue of $4.78 billion during the same period a year ago.
Federal-Mogul ranks No. 43 on the Automotive News list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $3.48 billion in fiscal 2006.