7th November 2006 - Financial Restructuring at TMD Friction

Burden of Debt at TMD Friction Significantly Reduced / Over 60 million euros for the "Speed" Improvement Programme

TMD Friction Holding GmbH (TMD Friction) has signed binding agreements for its financial restructuring. The company, which is one of the world's leading manufacturers of brake friction parts, will reduce its debt burden by more than 750 million euros. In addition, TMD Friction will raise over 60 million euros for investments in operations and to fund its growth plans.

Derek Whitworth, CEO and President of TMD Friction: "Working with both our sharehold-ers and lenders we have reached a consensual solution that gives TMD Friction Group a solid financial base for the future. This enables us to build on today's profitable operation and use TMD Friction Group's world leading friction technology and brands to achieve sustained business success."

As a result of the agreement reached, the current mezzanine lenders have converted existing loans into shares. This makes them the majority shareholders of the TMD Friction Group with 95 percent; the remaining five percent being retained by the previous share-holders.

As part of the restructuring, TMD Friction has also secured new financing of 375 million euros underwritten by Credit Suisse to refinance its existing senior lending. A significant part of these new funds will be used to support operational restructuring, collectively la-belled "Speed" programme.

TMD Friction has established a new Board of Directors, well experienced in restructuring programmes to oversee the successful implementation of "Speed". "Speed" programme secures competitiveness

As part of this programme, over 60 million euros will be invested over the next three years. Among other things, TMD Friction is building a new factory in Eastern Europe, and further developing the Leverkusen site. An investment programme which has already been underway in Brazil and Mexico since 2004 will strengthen the company's presence in these important markets. In Asia, TMD Friction will further intensify its activities, particularly in China. Moreover, the programme includes various packages of measures to optimise internal processes, especially in strategic sourcing and new product introduction - many of these have actually started in January 2006. First positive results can already be seen, for example the implementation of a cost and customer oriented product development and introduction process, improved purchasing conditions through a group-wide sourcing process as well as revised labour terms and conditions and over-head cost reductions in Germany.

Whitworth: "Competition in the automotive industry remains intense. We must constantly look for ways to improve value for our customers and shareholders. The fact that we have succeeded in fundamentally improving our financial situation and securing funding for our investment programme is a major milestone."

About TMD Friction

TMD Friction Group is one of the world's leading manufacturers of brake friction materials in the original equipment market of the automotive and brake industry. Its product portfolio comprises disc brake pads and drum brake linings for passen-ger cars and commercial vehicles together with brake pads for racing and friction materials for industry. TMD Friction also supplies the global aftermarket with its Textar, Pagid, Mintex, Don, Cobreq, and Cosid brands. With locations in Germany and five other European countries, the USA, Brazil, Mexico, China, Japan and Malaysia, TMD Friction generated a turnover of 652 million euros in 2005 and employs 4,500 people worldwide.

Source: TMD Friction Press Release