9 November 2005
BDA advises UK administrator on the restructuring of Turner & Newall, the Federal-Mogul UK subsidiary, and Federal-Mogul’s international operations
November 9, 2005
Business Development Asia LLC (“BDA”) was mandated jointly with Close Brothers Plc, to advise Kroll, the UK administrator of Turner & Newall (T&N). Federal-Mogul, a leading global automotive component supplier, went into Chapter 11 bankruptcy protection in 2001 due to asbestos liabilities. Kroll was appointed as administrator to Turner & Newall, which held most of Federal-Mogul’s non-US assets. Kroll retained BDA and Close Brothers to establish the fair value of the assets under the control of the UK administrators, and then to advise on negotiations with the US restructuring proponents, which included Carl Icahn, the leading unsecured US creditor of Federal-Mogul.
The US restructuring proponents initially proposed a restructuring plan that would roll the global assets of the company into a new company, to be owned by its creditors. To take ownership of the UK business, the US proponents offered a £73m cash dividend to the UK creditors.
The UK administrators began a controlled realization process to optimize both the strategic and financial value of the businesses.
BDA valued and advised on the divestiture of the Asian operations. These comprised 10 manufacturing locations in five countries (Japan, Korea, China, Thailand, India, Turkey) covering four different business divisions of Federal Mogul.
Within this high pressure, time critical environment, BDA’s advice was used to support court filings and statements in the US and UK courts. BDA was instrumental in bringing the Chapter 11 parties to agreement on a revised Chapter 11 emergence plan, which the Administrators and UK creditors jointly accepted. The US restructuring proponents agreed to take ownership of the UK business in return for UK creditors receiving a cash dividend of £375m.
Federal Mogul was acknowledged to be the most complex international insolvency yet undertaken in the United Kingdom.
The BDA transaction team was led by Andrew Huntley, Managing Director +44 20 7655 3500.
Business Development Asia LLC was founded in 1996. BDA assists multinational corporate and financial sector clients to identify and execute acquisitions, divestments, JVs, restructuring and capital raising, in Asia and internationally. The company is headquartered in New York with offices in London, Bahrain, Mumbai, Hong Kong, Shanghai, Seoul, and Tokyo. BDA employs 50 full-time professional staff across its eight offices, supplemented by a team of senior advisors around the world. BDA’s client list includes Air Products, Cadbury Schweppes, Celestica, Dow Chemical, DuPont, Ecolab, Great Lakes, Hercules, Huntsman, Inabata, Kimberly-Clark, Lear, Lubrizol, Mars, Morgan Stanley, Nalco, Parker Hannifin, Reuters, Rohm & Haas, Ryder, Siemens, SigmaKalon, Sumitomo Chemical, TATA Auto Components, Tenneco, Tredegar, Visteon, WR Grace, and the British Government. Further information on BDA is available at www.bdapartners.com