UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 16, 2020 (January 15, 2020)
GARRETT MOTION INC.
(Exact name of registrant as specified in its charter)
| Delaware | 1-38636 | 82-487189 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| La Pièce 16, Rolle, Switzerland, 1180 | 1180 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: +41 21 695 30 00
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading |
Name of each exchange | ||
| Common Stock, $0.001 par value per share |
GTX | New York Stock Exchange |
Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01 Regulation FD Disclosure
On January 15, 2020, Garrett Motion Inc. (the “Company”) filed a Complaint in the Commercial Division of the Supreme Court of the State of New York, County of New York in connection with its ongoing action (the “Action”) against Honeywell International Inc. (“Honeywell”) for declaratory judgment, breach of contract, breach of fiduciary duties, aiding and abetting breach of fiduciary duties, corporate waste, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. The Action was previously announced by the Company in its December 2, 2019 press release which the Company furnished through a Current Report on Form 8-K on the same date.
On January 16, 2020, the Company issued a press release announcing the filing of the Complaint. A copy of the press release is furnished as Exhibit 99.1 to this Current Report.
The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act.
Forward-Looking Statements
This Current Report on Form 8-K 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 or our management intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements including without limitation our statements regarding our plans to pursue litigation against Honeywell. 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 December 31, 2018, as well as our other filings with the Securities and Exchange Commission, under the headings “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. Forward-looking statements are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by our forward looking statements.
Item 9.01 Financial Statement and Exhibits
(d) Exhibits
| Exhibit |
Description | |
| 99.1* | Garrett Motion Inc. Press Release dated January 16, 2020 | |
| * | Furnished herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GARRETT MOTION INC. | ||
| By: | /s/ Jerome Maironi | |
| Jerome Maironi | ||
| Senior Vice President, General Counsel and Corporate Secretary | ||
Date: January 16, 2020
Exhibit 99.1
GARRETT MOTION FILES COMPLAINT AGAINST HONEYWELL IN ASBESTOS INDEMNITY SUIT
104-Page Filing Details How Honeywell Foisted Its Legacy Asbestos Liabilities Upon Garrett Through An
Unenforceable 30-Year Indemnification Agreement
ROLLE, Switzerland – January, 16, 2020 – Garrett Motion Inc. (NYSE: GTX) today filed the complaint in its lawsuit, initiated on Dec. 2, 2019, against Honeywell International Inc. (NYSE: HON), related entities and certain affiliated individuals in the Supreme Court of the State of New York.
The complaint details how Honeywell and its executives, and not Garrett’s current management, devised Garrett’s spinoff to offload Honeywell’s more than $1 billion legacy Bendix asbestos liability, while saddling Garrett with unconscionable and illegal covenants that unnecessarily limit its ability to control its long term future. Garrett’s complaint includes the following assertions:
| 1. | Top Honeywell executives devised Garrett’s spinoff to offload the financial burdens of its asbestos liabilities. In October 2018, Honeywell spun off what remained of its Transportation Systems business, primarily a turbocharger business, into what is now Garrett Motion. Garrett’s lawsuit arises from Honeywell’s unilateral imposition of a 30-year Indemnification Agreement as part of that spin. This agreement requires Garrett to compensate Honeywell for payments made to resolve Honeywell’s asbestos liabilities arising from Honeywell’s legacy Bendix automotive brake business. That brake business is completely unrelated to Garrett’s turbocharger business. |
| 2. | Honeywell did not negotiate the one-sided Indemnification Agreement with Garrett. Because no rational company would ever voluntarily agree to the egregious terms of the Indemnification Agreement, Honeywell installed one of its own in-house lawyers prior to the spinoff as Garrett’s president and sole director for the purpose of forcing these unconscionable terms on Garrett. In addition, Garrett did not have independent legal representation during the spinoff process: Honeywell retained the same lawyers to represent both Honeywell and Garrett in connection with the spinoff. The lawyers blindly acceded to Honeywell’s wishes, regardless of the best interest of their other client, Garrett. |
| 3. | The Indemnification Agreement violates New York law. The Indemnification Agreement purports to illegally require Garrett to indemnify Honeywell for punitive damages, which are meant to punish Honeywell, including for its reckless disregard of the dangers of asbestos. Under New York law, Garrett cannot be required to indemnify Honeywell for any amount attributable to punitive damages or Honeywell’s own intentional misconduct, as well as attorneys’ fees and related costs incurred in defending against or settling such claims. |
| 4. | Honeywell incorporated onerous and unlawful covenants into the Indemnification Agreement that were uniquely designed to give Honeywell a veto over Garrett’s key corporate decisions for 30 years. These covenants hobbled Garrett’s ability, as an independent, publicly traded company, to refinance its debt and engage in corporate transactions, including mergers and acquisitions, that would benefit Garrett and its shareholders. As detailed in the complaint, Garrett has no right to prepay Honeywell, |
Page 1 of 3
| as it would a lender, which leaves Honeywell with control over these decisions by Garrett for 30 years regardless of Garrett’s circumstances. The complaint describes how such extensive and long-lasting control by Honeywell over Garrett’s affairs has no legitimate basis and is unlawful. |
| 5. | Honeywell is not entitled to indemnification, and has breached the Indemnification Agreement it wrote for itself. Honeywell denied many of Garrett’s requests for information concerning the liability for which it is indemnifying Honeywell, despite Garrett’s right to this information and its attempts for more than a year to obtain it. Honeywell has also failed to establish its right to indemnity for each and every asbestos settlement of the thousands for which it seeks indemnification. Moreover, Honeywell has not allocated between indemnifiable amounts and non-indemnifiable amounts, including punitive damages or intentional misconduct. |
For more than a year since its spinoff, Garrett has attempted to resolve these critical governance and financial issues amicably with Honeywell. After repeated, but unsuccessful discussions with Honeywell, Garrett believes it has no alternative but to turn to the Court for relief. Garrett intends to vigorously pursue its claims.
During its negotiations, Honeywell has continued to force Garrett to pay Honeywell’s asbestos labilities, including amounts paid to settle punitive damages exposure and Honeywell’s wrongful conduct, both of which are not permitted under New York law, under the threat of improperly triggering a cascade of defaults under Garrett’s financial indebtedness. Despite asserting that Honeywell’s agreement is unlawful and unenforceable, Garrett has continued to comply with its terms, including making timely quarterly indemnity payments under protest. Garrett’s exposure remains capped at $175 million annually throughout the agreement.
Garrett’s lawsuit, initiated through a Summons with Notice filed on Dec. 2, 2019, seeks compensatory damages, rescission of the Indemnification Agreement, as well as other relief from the Court. The complaint can be read here.
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 or our management intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements including without limitation our statements regarding our plans to pursue litigation against Honeywell. 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 December 31, 2018, as well as our other filings with the Securities and Exchange Commission, under the headings “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. Forward-looking statements are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by our forward-looking statements.
Page 2 of 3
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.
| Contacts |
||
| Media |
Investor Relations | |
| Mike Stoller |
Paul Blalock | |
| +1 734 392-5525 |
+1 862 812-5013 | |
| michael.stoller@garrettmotion.com |
paul.blalock@garrettmotion.com | |
| Michael Cimini |
||
| +1 973 216-3986 |
||
| Michael.Cimini@garrettmotion.com | ||
Page 3 of 3