Icahn Now Controls 75 Percent of Federal-Mogul Stock: Deal Closed with Asbestos Trust Fund

From Detroit Free Press

Billionaire investor and chairman of Federal-Mogul Corp. Carl Icahn bought half of the stock in the Southfield, MI-based parts supplier last week, giving him control of three of every four company shares.

Icahn exercised his option to buy 50.1 million shares of the company for $900 million, according to a filing Wednesday with the Securities and Exchange Commission.

The shares came from a trust that Federal-Mogul formed to pay claimants in thousands of asbestos cases filed against Federal-Mogul, which makes a range of products including brake pads, spark plugs and windshield wipers.

Those asbestos cases, which stemmed from the company’s acquisitions, forced the supplier to file for Chapter 11 bankruptcy protection in 2001. The company emerged in December of last year with Icahn owning 25 percent of its stock. With the shares that Icahn bought Monday, he owns 75 percent of the company.

As part of the purchase, Icahn named three new directors to the company’s board:

–James Vandenberghe, vice chairman at nearby Lear Corp., who plans to retire in May. Lear shareholders in July rejected Icahn’s bid to buy the Southfield-based seating company.

–George Feldenkreis, founder of upscale clothing brand Perry Ellis.

–James Laisure, a director at American Railcar Industries Inc., whose board Icahn also leads.

The three replace directors who had represented the asbestos trust.