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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (85819)	11/24/2000 8:16:33 AM
From: JHP	Read Replies (1) \| Respond to of 132070

Michael your opinion please. tia john Wednesday November 22, 4:48 pm Eastern Time Moody's again cuts Federal-Mogul, shares fall By Jonathan Stempel NEW YORK, Nov 22 (Reuters) - Federal-Mogul Corp.'s (NYSE:FMO - news) debt and bank loan ratings were cut two notches by Moody's Investors Service Inc. on Wednesday, as the credit rating agency expressed its ``escalating concerns'' about the auto parts maker's short-term liquidity and solvency. It was the second time in six weeks that Moody's cut its ratings for the Southfield, Mich.-based company, which has struggled with weak aftermarket sales, a softer heavy-duty truck market and internal cost-cutting efforts. Moody's also said on Wednesday it may cut the ratings again. Its actions affect about $4.7 billion of debt. Federal Mogul's stock fell 18 percent Wednesday on the New York Stock Exchange, closing at $2, down 7/16. It was trading at $2-3/8 immediately before the announcement. The stock has fallen 90 percent this year. One dealer on Wednesday offered the company's ``distressed'' 7.5 percent notes maturing in January 2009 at 19 cents on the dollar, with an effective yield to maturity of 46.22 percent. Federal-Mogul's debt carries ``junk'' grades. Junk debt usually carries high yields to compensate investors for extra risk. A rating cut can result in higher borrowing costs. Moody's cut Federal-Mogul's $2.325 billion of senior unsecured notes to ``B2,'' a medium junk grade and its fifth highest, from ``Ba3.'' It made identical cuts to the company's $1.75 billion of senior unsecured bank loans. It also cut Federal-Mogul's $575 million of junior subordinated bonds to ``Caa1'' from ``B2,'' and made several other cuts. Moody's said ``the company's operating cash flow has steadily declined over the last 12 months, with reported quarterly results repeatedly falling materially below management's earlier market guidance.'' The agency said an expected decline in original equipment production volume next year ``will likely place further pressure on sales and margins.'' Federal-Mogul derives about 55 percent of its sales from the original equipment market. Moody's also said it has concerns about Federal-Mogul's ability to manage asbestos-based litigation, and that there is a ``high likelihood'' that Federal-Mogul will violate the terms of an existing credit agreement at the end of the year. The agency said its review will depend on Federal-Mogul's ability to renegotiate its bank loans and find a permanent chief executive in a timely manner. The company said on September 19 that Chief Executive Dick Snell stepped down ``by mutual agreement.'' Robert S. Miller Jr., a Federal-Mogul director since 1993, is serving as the company's interim chief executive. Other factors in the review include Moody's own analysis of the company's future operating cash flow and asbestos-related obligations. Other rating agencies recently cut Federal-Mogul's debt. Standard & Poor's Corp. on November 1 cut its senior unsecured debt and bank loans two notches to ``B-plus.'' One day earlier Fitch cut the senior unsecured debt to ``BB-minus.'' Those ratings are roughly one and two notches higher, respectively, than Moody's new ratings. Email this story - Most-emailed articles - Most-viewed articles

To: Knighty Tin who wrote (85819)	11/24/2000 10:30:51 AM
From: BSGrinder	Read Replies (1) \| Respond to of 132070

Michael, Is this a good time to buy a first third of Duramed? Has there been any change to their story (and value) from your point of view? Thanks, /Kit