Federal-Mogul shares jump on refinancing plans

NEW YORK (AP) -- Federal-Mogul shares rose Monday after the auto supplier said it would attempt to refinance $3.05 billion in debt, and forecast better-than-expected revenue for the quarter and the year.

THE SPARK: The Southfield, Mich.-based company, which is controlled by activist investor Carl Icahn, said in a regulatory filing it plans to enter into one or more new credit agreements for an asset-based revolving loan of about $550 million and a term loan facility of about $1.75 billion.

In addition, the company plans to sell $750 million in debt.

THE BIG PICTURE: Federal-Mogul said it expects to complete the refinancing shortly after it sells $500 million in shares under a rights offering that began last week.

If it completes the refinancing, Federal-Mogul said it expects its interest expense to increase.

The company also released revenue predictions for the current quarter and full year, projecting second-quarter revenue of $1.7 billion to $1.8 billion and full-year revenue of $6.8 billion to $7 billion. Analysts, on average, were expecting revenue of $1.7 billion for the quarter and $6.71 billion for the year.

THE SHARES: Up 71 cents, or 7.5 percent, to $10.31 in afternoon trading, after peaking at $10.38 earlier in the session. Over the past 52 weeks, the company's shares have traded between $4.80 and $11.79.