Garrett Motion Selects Enhanced Proposal From Centerbridge and Oaktree Following Robust Competitive Process
ROLLE,
The Company’s decision comes after considering proposals from several parties, including bidders at the court-approved auction and the Plan Sponsors, and involved multiple bids from the court-approved “stalking horse”,
“We are very pleased with the results of the competitive process undertaken,” said
“This proposed transaction addresses Garrett’s pre-filing capital structure, and enables us to benefit from the strong support of Centerbridge and Oaktree, two leading financial sponsors with track records of helping companies create value, as we position the Company to successfully capitalize on the opportunities created by the ongoing transformation of the auto industry. It provides the right capital structure to ensure Garrett’s long-term viability and sets the foundation for the next phase of Garrett’s growth,” said Olivier Rabiller, President and Chief Executive Officer of Garrett. “We look forward to emerging from Chapter 11 stronger and better positioned to continue to provide exceptional service to our customers, be a reliable partner to our suppliers and other stakeholders, and create long-term opportunities for our dedicated employees.”
Centerbridge and Oaktree are leading investment management firms with the commitment and resources to help Garrett succeed. The institutions have significant automotive supplier investment experience, including with respect to Dana (Centerbridge),
Centerbridge and Oaktree jointly said: “We look forward to working with Garrett Motion to meet the growing demand for its products and technology. It is well positioned for long-term success, given its market leading franchise, blue-chip customer base, and long history of R&D and reliability. This transaction will best position the Company and its talented team to invest in growth, support its innovation, and continue to deliver value to all of its stakeholders, including customers, suppliers and employees.”
The Proposed Transaction
Under the proposed transaction (the “Proposed Transaction”):
- All creditors of the Company other than Honeywell International Inc. (“Honeywell”) are unimpaired and paid in full in cash. Honeywell has agreed to the resolution of its claims as described below.
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Prepetition funded debt is reduced from approximately
$1.9 billion on the date of the Chapter 11 filing to an estimated$1.1 billion at emergence.
-
Stockholders (other than the parties to the Plan Sponsor Agreement) will be offered the option of receiving cash for their shares at a price of
$6.25 per share, representing an approximate 30% premium over the market price as of the close of tradingFriday, January 8, 2021 .
-
The Company will remain publicly listed. Stockholders who do not opt to receive cash will be entitled to retain their existing shares of common stock
and
receive the right to subscribe for a share of up to
$200 million of Series A Preferred Stock on the same terms as the Plan Sponsors.
-
The Plan Sponsors and stockholders participating in the rights offering will subscribe for
$1,250 million of Series A Preferred Stock, the proceeds of which will be used to repay existing funded debt, make a$375 million payment to Honeywell, fund cash payments to stockholders opting to receive cash for their shares and to pay transaction expenses.
- All asbestos and tax indemnification obligations to Honeywell incurred in connection with the 2018 spin-off will be resolved.
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In addition to receiving the
$375 million cash payment at emergence, Honeywell will receive Series B Preferred Stock payable in installments of$35 million in 2022, and$100 million annually 2023-2030. The Company will have the option to prepay the Series B Preferred Stock in full at any time at a call price equivalent to$584 million as of the emergence date (representing the present value of the installments at a 7.25% discount rate). The Company will also have the option to make a partial payment of the Series B Preferred Stock, reducing the present value to$400 million , at any time within 18 months of emergence. In every case the duration of future liabilities to Honeywell will be reduced from 30 years prior to the Chapter 11 filing to a maximum of nine years.
Other important terms and conditions of the Proposed Transaction are included in a Plan Sponsor Agreement, entered into by the Company, the Plan Sponsors and the other parties thereto.
The Company expects to file a modified Plan of Reorganization reflecting the terms of the Plan Sponsor Agreement by
Additional Information
The Company expects to continue operating without interruption, including providing customers with the same high-quality products and services they expect and continuing partnerships with its valued suppliers in the ordinary course of business.
Houlihan Lokey Inc. and
Court filings and other documents related to the Chapter 11 process are available at
http://www.kccllc.net/garrettmotion
or by calling the Company’s claims agent, KCC, at 866-812-2297 (
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of fact, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements including without limitation our statements regarding the anticipated impact of the COVID-19 pandemic on our business, expectations regarding global automotive demand and execution of our strategy. Although we believe forward-looking statements are based upon reasonable assumptions, such statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results or performance of the company to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to those described in our annual report on Form 10-K for the year ended
About Garrett Motion Inc.
Garrett Motion is a differentiated technology leader, serving customers worldwide for more than 65 years with passenger vehicle, commercial vehicle, aftermarket replacement and performance enhancement solutions. Garrett’s cutting-edge technology enables vehicles to become safer, and more connected, efficient and environmentally friendly. Our portfolio of turbocharging, electric boosting and automotive software solutions empowers the transportation industry to redefine and further advance motion. For more information, please visit www.garrettmotion.com .
About
About
Oaktree is a leader among global investment managers specializing in alternative investments, with
Garrett Motion Inc.
T: 973.216.3986
Michael.Cimini@garrettmotion.com
T: 847.421.0622
jeff.zilka@edelman.com
jeremy.fielding@kekstcnc.com
/
anntal.silver@kekstcnc.com
Oaktree:
(415) 618-8750 / (914) 907-6431
mediainquiries@oaktreecapital.com
Source: Garrett Motion Inc.