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April 26, 2021 – The Court hearing the Garrett Motion cases confirmed the Debtors’ Amended Plan of Reorganization [Docket No. 1161].
On September 20, 2020, Garrett Motion Inc. and 36 affiliated Debtors (NYSE: GTX; “Garrett” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of New York, lead case number 20-12212 (Judge Wiles). At filing, the Debtors, a manufacturer of turbocharger, electric-boosting and connected vehicle technologies for original equipment manufacturers and the automotive aftermarket, noted estimated assets of $2.066bn and estimated liabilities of $4.169bn ($1.86bn of funded debt). In a subsequently filed Schedule A/B, the lead Debtor noted $53.8mn of assets and $2.0bn of liabilities [Docket No. 313].
In an April 23rd press release, the Debtors stated that the Plan's confirmation "[positioned] Garrett to complete the implementation of the Plan, led by funds managed by Centerbridge Partners, L.P. ('Centerbridge') and Oaktree Capital Management, L.P. ('Oaktree'). Garrett expects that effective date will occur as soon as all conditions precedent to the Plan have been satisfied, and is currently targeting emergence by April 30, 2021.
The Plan infuses significant equity capital into the Garrett’s capital structure in the form of approximately $1.3 billion in new Series A Preferred Stock. It also settles existing litigation with Honeywell and restructures financial obligations transferred to Garrett at the time of its spinoff. Garrett has also obtained $1.55 billion of committed debt financing, including a $1.25 billion-equivalent term loan and a new $300 million exit revolving facility. In addition to the support of creditors and stockholders, the Plan also received the support of Honeywell, the Official Creditors Committee and the Official Equity Committee.”
The cornerstone of the Plan is a global settlement reached with former parent Honeywell International Inc., which the Debtors note allowed the Plan to move toward confirmation free of the cost and distraction of potential litigation. Also, the Debtors state in the Plan documents that a primary driving factor in Honeywell's agreeing to settle was the caveat that Centerbridge Partners, L.P. and Oaktree Capital Management, L.P. must serve as Plan sponsors. As such the all-encompassing settlement would not carry over to any alternate Plans.
The Debtors' Memorandum in support of Plan confirmation reads: “The Plan and the transactions embodied therein are the result of an extensive and successful competitive sale process and the extensive negotiations among the Debtors, the Plan Sponsors, Honeywell, the Additional Investors, the Consenting Lenders, the Consenting Noteholders, the UCC and the Equity Committee. It has been approved by the Board of Directors and management of the Debtors, and fulfills the Debtors’ key objectives of exiting these Chapter 11 Cases with a sustainable and deleveraged balance sheet that well positions the Company to compete in a dynamic and competitive market. The Plan also consensually resolves complex, burdensome and uncertain litigation and satisfies the Debtors’ long-term legacy liabilities to Honeywell through the issuance of the Series B Preferred Stock.
The Plan has received overwhelming support from the Classes entitled to vote. The Plan provides, among other things, for (a) committed direct equity investments by the Plan Sponsors in the amount of $668.8 million to purchase Convertible Series A Preferred Stock from the Reorganized Debtors; (b) issuance of Series B Preferred Stock as part of a consensual and global resolution of Honeywell’s claims against the Debtors and their affiliates; (c) the ability of GMI’s stockholders to elect to (i) retain their stock, (ii) retain their stock and participate in the $632 million Rights Offerings, which are fully backstopped by the Additional Investors or (iii) receive a cash buy-out of $6.25 per share in exchange for cancellation of their existing GMI stock; and (d) other than for Honeywell, which has agreed to its treatment, payment in full of all general unsecured claims.
The Plan is the best available option for maximizing recoveries for the Debtors’ stakeholders, as demonstrated by stakeholders’ overwhelming support for the Plan. To get to this point, the Debtors explored all potential restructuring and plan alternatives by entering into a stalking horse purchase agreement for a sale of the Debtors’ businesses and conducting a public auction for any and all possible transactions. Following the extensive competitive process and discussions with stakeholders, the Debtors determined to pursue the transactions reflected in the Plan Support Agreement. The Plan, if confirmed and consummated, will permit the successful conclusion of these Chapter 11 Cases.”
The revised Disclosure Statement [Docket No. 994] adds: “The principal features of the Plan are set forth in the Plan Support Agreement (as amended, the ‘Plan Support Agreement’) among Centerbridge Partners, L.P. (‘Centerbridge’), Oaktree Capital Management, L.P. (‘Oaktree’), Honeywell International Inc. (‘Honeywell’), certain shareholders represented by Jones Day (the ‘Additional Investors’ and collectively, the ‘COH Group’), certain senior noteholders (the ‘Consenting Noteholders’), who collectively hold more than 88% of the Senior Notes and 58% of GMI’s Common Stock, and certain senior secured lenders, who collectively hold no less than 47% of the outstanding loans under the Senior Credit Facilities. The Debtors entered into the Plan Support Agreement to maximize the value of the Debtors’ estates following the Debtors’ extensive auction process and after hard fought, arm’s-length negotiations among the parties thereto. The Plan and Plan Support Agreement, as further described in this Disclosure Statement, provide for the following restructuring transactions:
- the infusion of significant debt and equity commitments to support the Debtors’ go forward operations and payments under the Plan as follows:
- committed direct equity investments by Centerbridge and Oaktree in the amount of $668.8 million in the aggregate to purchase Convertible Series A Preferred Stock from the Reorganized Debtors;
- rights offerings for an aggregate amount of $632 million of Convertible Series A Preferred Stock (including the Backstop Allocation, as defined below), available to Holders of Existing Common Stock subject to the terms of the Plan Support Agreement and the Rights Offering Procedures (as defined below), which is fully backstopped by the Equity Backstop Parties, and of which approximately $270 million is available to Holders of Existing Common Stock who are not Plan Sponsors, Honeywell or an Equity Backstop Party; and
- committed debt financing of $1.55 billion;
- payment in full in cash, plus accrued and unpaid interest at the non-default contractual rate, plus additional interest of 1.00% per annum on all outstanding principal and other overdue amounts under the Prepetition Credit Agreement from the Petition Date to the Effective Date for Holders of Prepetition Credit Agreement Claims (such additional interest estimated to be approximately $9 million);
- payment in full in cash, plus accrued and unpaid interest in cash at the non-default contractual rate through the Effective Date plus $15 million in cash in resolution of claims related to the Applicable Premium, for Holders of Senior Subordinated Noteholder Claims;
- payment in full in cash for all other secured and unsecured creditors, except Honeywell, who has agreed to its treatment;
- a global settlement with Honeywell, who will receive on the Effective Date $375 million in cash and Series B Preferred Stock issued by the Reorganized Debtors pursuant to which the Reorganized Debtors will pay Honeywell a total of $834.8 million in the aggregate through 2030, subject to the various put and call rights set forth therein (the ‘Honeywell Settlement’); and
- Holders of Existing Common Stock will have the option to receive a number of shares of GMI Common Stock equal to the number of shares of Existing Common Stock held by each such Holder and each such Holder’s Pro Rata share of the Subscription Rights or, at such Holder’s election (unless such stockholder is a party to the Plan Support Agreement), receive cash in the amount of $6.25 per share in exchange for cancellation of their shares.
The consensual global resolution of Honeywell’s claims against the Debtors, and treatment thereof, is an integral, non-severable component of the Plan. Honeywell contractually agreed through the Plan Support Agreement to convert its claims into preferred equity at a significant discount to the amount at which Honeywell believes its claims are worth. Honeywell also has agreed to forgo having special governance rights on account of its Series B Preferred Stock and to limit its representation on the Company’s seven-member (or larger, with Honeywell consent) board to a single director. Honeywell’s agreement to accept the foregoing treatment and remain in the Debtors’ capital structure on these terms, however, is predicated on Centerbridge and Oaktree serving as the Plan Sponsors, including their investment in, and associated control of, the Reorganized Debtors as contemplated by the Plan Support Agreement.
Centerbridge and Oaktree have committed to invest a significant amount of new equity capital in the Reorganized Debtors in the form of Convertible Series A Preferred Stock and, through this investment, they will have the right to nominate a majority of the members to the New Board. Honeywell’s willingness to settle its claims and remain in the capital structure is based, in significant part, on its trust and confidence in the Plan Sponsors and the members of the New Board to act as exemplary corporate stewards in guiding the direction of the Debtors’ business post-emergence. Accordingly, the Honeywell Settlement is not ‘portable’ to any alternative plans.
Honeywell’s agreement to the proposed treatment of its claims facilitates and crystallizes recoveries for Holders of Existing Common Stock by providing such Holders with a substantial, minimum cash recovery option without the threat that Honeywell’s claims could significantly reduce or eliminate recoveries to common stockholders… Resolving Honeywell’s claims and all related litigation also removes a material impediment to confirmation of the Plan and allows the Debtors to expeditiously move the Chapter 11 Cases to completion with the support of a majority of their stakeholders.”
The following is a summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the Plan and/or Disclosure Statement):
- Class 1 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
- Class 2 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
- Class 3 (“Secured Tax Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
- Class 4 (“Prepetition Credit Agreement Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $1,466,710,090 and expected recovery is 100%. Each Holder will receive on the Effective Date payment in Cash in an amount equal to such Holder’s Prepetition Credit Agreement Claims.
- Class 5 (“Senior Subordinated Noteholder Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is €350.0mn and the estimated recovery is 100%. Estimated Claims represent aggregate outstanding principal and do not include any interest, fees or expenses constituting such Claims.
- Class 6 (“Honeywell Plan Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is N/A and expected recovery is N/A. Honeywell will receive: (a) a payment of $375.0mn in Cash on the Effective Date (which payment will be allocated first to the Honeywell Plan Claims arising from the Tax Matters Agreement up to the full amount owing under that agreement) and (b) the Series B Preferred Stock issued on the Effective Date. Honeywell’s estimated recovery under the Equity Committee Plan is estimated as $958.7mn, reflecting $375.0mn of cash and the payment to Honeywell by New GMI in a hypothetical exercise of the Series B Preferred Stock call option as of the Effective Date. Such recovery may not reflect actual market value of the Series B Preferred Stock.
- Class 7 (“General Unsecured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is N/A and the estimated recovery is 100%.
- Class 8 (“Intercompany Claims”) is impaired/unimpaired, deemed to accept/reject and not entitled to vote on the Plan.
- Class 9 (“Intercompany Interests”) is impaired/unimpaired, deemed to accept/reject and not entitled to vote on the Plan.
- Class 10 (“Section 510(b) Claims”) is impaired, deemed to reject and not entitled to vote on the Plan.
- Class 11 (“Existing Common Stock”) is impaired and entitled to vote on the Plan. Each Holder will receive (a) its Pro Rata share (determined with respect to all Holders of Existing Common Stock) of the Subscription Rights and (b) either (i) a number of shares of GMI Common Stock equal to the number of shares of Existing Common Stock held by such Holder, or (ii) if such Holder of Existing Common Stock timely exercises its Cash Out Option, its Cash-Out Consideration, provided, however, that any Holder of Existing Common Stock that timely exercises its Cash-Out Option may not exercise its Subscription Rights and any delivery of a Subscription Form or any consideration will be deemed null and void and not accepted (and such consideration promptly returned to the Holder of Existing Common Stock).
On April 21, 2020, the Debtors' claims agent notified the Court of the Plan voting results [Docket No. 1147], which were as follows:
- Class 4 (“Prepetition Credit Agreement Claims”) 293 claim holders, representing $1,175,938,858.70 (100%) in amount and 100% in number, accepted the Plan.
- Class 5 (“Senior Subordinated Noteholder Claims”) 62 claim holders, representing $336,161,000.00 (100%) in amount and 100% in number, accepted the Plan.
- Class 6 (“Honeywell Plan Claims”) 37 claim holders, representing $46,250,000,000.00 (100%) in amount and 100% in number, accepted the Plan.
- Class 11 (“Existing Common Stock Holders”) 5,705 claim holders, representing 61,240,963 (or 99.91%) in amount and 93.51% in number, accepted the Plan. 396 claim holders, representing 52,975 (or 0.09%) in amount and 6.49% in number, rejected the Plan.
Settlement with Equity Committee
[As previously reported] In a press release (rest of 8-K here) heralding Court approval of the Disclosure Statement, the Debtors stated: "the U.S. bankruptcy court has approved the disclosure statement in respect of Garrett’s proposed plan of reorganization, which is sponsored by a consortium of investors led by funds managed by Centerbridge Partners, L.P. ('Centerbridge') and Oaktree Capital Management, L.P. ('Oaktree') (the 'Plan Sponsors'). Garrett has also filed an amended plan of reorganization to reflect the outcome of the successful court-approved mediation process, where Garrett and the Plan Sponsors reached a consensual agreement with the official equity committee on the terms and conditions of the plan of reorganization. Garrett expects to commence the mailing of information packages to its creditors and stockholders in connection with voting on the plan of reorganization and other related matters on or around March 19, 2021.
Garrett and the Plan Sponsors will now work to implement the proposed transaction. Garrett continues to target emergence from Chapter 11 by the end of April 2021, subject to receiving bankruptcy court approval of its plan of reorganization and satisfaction of customary closing conditions."
The March 10th hearing had long loomed large on the Debtors' calendar, with the Debtors set to face off against their deeply unhappy official committee of equity security holders (the "Equity Committee"), but that changed dramatically overnight with the Equity Committee signing up to the Debtors' Plan Support Agreement and withdrawing their objections ("The resolution between the parties resolves the Equity Committee’s objections to the Plan, Disclosure Statement and PSA/BCA Motion, as well as the Equity Committee’s Exclusivity Termination Motion and proposed plan of reorganization"). The breakthrough moment follows Court-ordered mediation overseen by Judge Sean Lane and the amended Plan documents reflect a global consensual resolution that has turned the March 10th hearing from a moment of reckoning into an oft-delayed hearing on the adequacy of the Debtors' Disclosure Statement.
Much of the amended language in the Plan documents relates to the consensual resolution, which is summed up as follows: "Following certain discussions among the Debtors and other parties-in-interest with respect to Plan issues following the February 16 Hearing, the Debtors, the Equity Committee, the COH Group and certain additional parties agreed to proceed with court-approved mediation and on February 23, 2021, the Court entered the Order Establishing Terms for Plan Mediation [D.I. 954], under which Judge Sean H. Lane was appointed mediator.Through the mediation, the Debtors, the Equity Committee, the COH Group, and the additional parties to the mediation, with Judge Lane’s assistance as the mediator, reached a consensual resolution regarding certain aspects of the Plan, and on March 9, 2021, the Plan Support Agreement was subsequently amended and restated to provide for, among other things:
(i) a direct equity investment of $668.8 million by Centerbridge and Oaktree to purchase Convertible Series A Preferred Stock,
(ii) enlarged rights offerings in an aggregate amount of $632 million (including the Backstop Allocation), consisting of the 1145 Rights Offerings and the Accredited Investor Rights Offering subject to the terms of the Equity Backstop Commitment Agreement, the Rights Offering Procedures, and the Plan Support Agreementand fully backstopped by the Equity Backstop Parties in exchange for the Backstop Allocation, with up to $270 million of such Rights Offerings available to Holders of Existing Common Stock other than members of the COH Group, and
(iii) an increase of the conversion price to common stock of the Convertible Series A Preferred Stock from $3.50 to $5.25.
On an as converted basis and accounting for the increase in an aggregate amount of Series A Preferred Stock, holders of Series A Preferred Stock will represent 76.5% of the total common equity of reorganized Garrett as compared to 82.5% of the total common equity of reorganized Garrett under the prior COH Plan. The increased conversion price results in a 5.9% reduction in dilution to existing common equity holders on an as converted basis assuming no shareholder exercises its Cash-Out Option.
Assuming no shareholder exercises its Cash-Out Option and each shareholder participates fully in the Rights Offering, the COH Group in the aggregate will hold 236,917,221 shares of reorganized Garrett on an as converted basis, representing 73.2% of the total common equity of reorganized Garrett on an as converted basis.The resolution between the parties resolves the Equity Committee’s objections to the Plan, Disclosure Statement and PSA/BCA Motion, as well as the Equity Committee’s Exclusivity Termination Motion and proposed plan of reorganization."
The Debtors have filed an 8-K covering the developments, with that filing attaching (i) the Second Amended and Restated Plan Support Agreement and (ii) the Replacement Equity Backstop Commitment Agreement, each dated as of March 9, 2021.
Exhibits attached to the Disclosure Statement [Docket No. 913]:
- Appendix A: Debtors’ Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code (Separately filed at Docket No. 912)
- Appendix B: Liquidation Analysis
- Appendix C: Solicitation Procedures Order
- Appendix D: Financial Projections
- Appendix E: Estimated Enterprise Valuation Analysis
- Exhibit A: Debtors’ Organizational Structure
The Debtors filed Plan Supplements at Docket Nos. 1108, 1145 and 1156 which attached the following:
- Exhibit 1: Draft of Second Amended and Restated Certificate of Incorporation of Garrett Motion Inc. (Revised at [Docket No. 1145])
- Exhibit 2: Draft of Second Amended and Restated By-Laws of Garrett Motion Inc.
- Exhibit 3: Draft of Registration Rights Agreement (Revised at [Docket No. 1145])
- Exhibit 4: Draft of Garrett Motion Inc. Series A Investor Rights Agreement (Revised at [Docket No. 1145])
- Exhibit 5: Draft of Certificate of Designations of Series A Cumulative Convertible Preferred Stock of Garrett Motion Inc. (Revised at [Docket No. 1145])
- Exhibit 6: Draft of Certificate of Designations of Series B Preferred Stock of GMI (Revised at [Docket No. 1145])
- Exhibit 7: Draft of Exit Financing Credit Agreement
- Exhibit 8: Management Incentive Plan Disclosure
- Exhibit 9: New Garrett Motion Inc. Board Members (Revised at [Docket No. 1156])
Events Leading to the Chapter 11 Filing
In a declaration in support of the Chapter 11 filing (the “Deason Declaration”) [Docket No. 16], Sean Deason, the Debtors’ Chief Financial Officer, detailed the events leading to Garrett’s Chapter 11 filing. The Deason Declaration provides: “The Company was spun-off by its prior owner, Honeywell International Inc. (‘Honeywell’), less than two years ago, in October of 2018. The spin-off created a highly leveraged capital structure. Honeywell caused the Company, prior to the spin-off, to issue approximately $1.6 billion of new third-party indebtedness under the Senior Credit Facilities (defined below) and Senior Notes (defined below) to fund an approximately $1.6 billion cash distribution to Honeywell. Honeywell also caused an important subsidiary of the Company (Garrett ASASCO Inc., or ‘ASASCO’) to enter into a financially extraordinary indemnity contract, with a term of 30 years and maximum payments up to $5.25 billion, to reimburse Honeywell for legacy asbestos exposure of Honeywell arising out of an unrelated Honeywell business. The inherited capital structure is not sustainable. It puts the Company at a substantial disadvantage to its competitors when dealing with OEMs and other business partners, reduces the Company’s ability to invest in new technologies, eliminates access to new debt and equity capital and limits the Company’s ability to absorb adverse market conditions.
The outbreak of the COVID-19 pandemic underscored the problem with the Company’s highly leveraged capital structure. The Company’s production, which includes a major manufacturing plant in Wuhan, China, was halted for nearly two months. As the pandemic continued, the resulting global shutdown also shrank demand for the Company’s products. With rising unemployment, uncertainty about the future and limited need for travel, the production of global light vehicles dropped by 43.2% percent in the second quarter of 2020 as compared to the second quarter of 2019 and has not fully recovered. However, the Company’s capital structure prevented many of the capital raising or other liquidity alternatives available to, and utilized by, the Company’s competitors.”
Petition Date Perspective
In a press release announcing the filing, Garrett advised that “it has entered into an agreement with KPS Capital Partners, LP ('KPS') with respect to a potential purchase of its business and commenced voluntary Chapter 11 cases with the United States Bankruptcy Court for the Southern District of New York in order to implement the purchase.
In connection with its reorganization, the Company has entered into a Restructuring Support Agreement with holders of approximately 61% of the Company’s outstanding senior secured debt as of the date of the chapter 11 filing and is seeking Court approval of $250 million of debtor-in-possession financing, arranged by Citigroup. The proceeds of the new financing, which is subject to Court approval and the satisfaction of other conditions precedent, will supplement cash flow from ongoing operations and bolster the Company’s liquidity position during the Chapter 11 cases.”
Olivier Rabiller, President and Chief Executive Officer of Garrett, commented: “Although the fundamentals of our business are strong and we have continued to try to develop our business strategy, the financial strains of the heavy debt load and liabilities we inherited in the spin-off from Honeywell – all exacerbated by COVID-19 – have created a significant long-term burden on our business.”
Proposed Sale to KPS
The Debtors entered into a Stock and Asset Purchase Agreement (the “Stalking Horse APA,” a draft of which is attached to the lead Petition) with private equity house KPS Capital Partners, LP ("KPS") on September 20th; with KPS agreeing to pace a section 363 sale process with a $2.1bn (cash) bid. Last week, KPS was designated the successful bidder ($550.0mn) for the bankruptcy assets of Brigg & Stratton.
The Deason Declaration (defined below) provides: "After a robust bidding process, the Company selected a winning bid of $2.1 billion from a new company formed by KPS Capital Partners, LP (together with its affiliates, ‘KPS’ or the ‘Stalking Horse Purchaser’). KPS is a family of investment funds with approximately $11.5 billion of assets under management (as of June 30, 2020). KPS makes controlling equity investments in manufacturing and industrial companies across a diverse array of industries and has a deep understanding of the manufacturing process, including the commitment, resources, and focus required to create and maintain world-class manufacturing operations in all regions of the world. KPS has a strong track record of successfully investing in automotive parts, transportation, and specialty vehicle industries. KPS has also successfully completed a number of acquisitions through bankruptcy sale processes, and was recently designated the successful bidder to acquire substantially all of the assets of the Briggs & Stratton Corporation for approximately $550 million in that company’s bankruptcy sale."
The Stalking Horse APA provides the following on purchase price: “Purchase Price” means an amount in Dollars equal to: (i) two billion one hundred million Dollars ($2,100,000,000); plus (ii) the amount, if any, by which Net Working Capital exceeds Target Net Working Capital; minus (iii) the amount, if any, by which Net Working Capital is less than Target Net Working Capital; plus (iv) Net Cash; minus (v) Transaction Expenses.
The Deason Declaration continues: "The Stalking Horse Purchase will substantially reduce the funded debt of the Company, as well as eliminate legacy [asbestos] liabilities. The following chart shows the funded debt of the Company today versus the funded debt currently contemplated by the Stalking Horse Purchaser after consummation of the Stalking Horse Purchase:
Restructuring Support Agreement
On September 20, 2020, the Debtors entered into a Restructuring Support Agreement (the “RSA”) with lenders holding approximately 61% of the aggregate principal amount of loans outstanding under the Senior Creditor Facilities (“Supporting Lenders”). Pursuant to the plan described in the RSA, if the Stalking Horse Purchase is successfully consummated, holders of claims under the Senior Credit Facilities will receive payment in full in cash on the effective date of the chapter 11 plan, other than default interest in an amount expected to equal approximately $15 million (assuming a 210 day case).
The RSA also includes an obligation of the Supporting Lenders to execute and deliver to the agent for the Senior Credit Facilities a separate consent (the 'Priming Consent') to the incurrence of the Debtors’ $250.0mn million debtor-in-possession credit facility (the “DIP Credit Facility,” see "Prepetition Indebtedness" below).
As of the Petition date, the Debtors have approximately $1.86bn in aggregate outstanding funded indebtedness, comprised of:
- Term Loan Facilities: The Debtors are parties to a September 2018 credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent. The Credit Agreement provides for senior secured financing of approximately the Euro equivalent of $1.45bn, consisting of (i) a seven-year senior secured first-lien term loan B loan facility, which consists of a tranche denominated in Euro of approximately €307.0mn and a tranche denominated in U.S. Dollars of approximately $417.5mn (the “Term B Facility”), (ii) a five-year senior secured first-lien term loan A facility in an aggregate principal amount of approximately €251.6mn (the “Term A Facility” and, together with the Term B Facility, the “Term Loan Facilities”) and (iii) a five-year senior secured first-lien revolving credit facility in an aggregate commitment amount of €430.0mn, with revolving loans to the Swiss Borrower to be made available in a number of currencies including Australian Dollars, Euros, Pounds Sterling, Swiss Francs, U.S. Dollars and Yen (the “Revolving Facility” and, together with the Term Loan Facilities, the “Senior Credit Facilities”). The Revolving Facility and the Term A Facility each mature on September 27, 2023. The Term B Facility matures on September 27, 2025.
As of the Petition Date, the outstanding principal amount under the Revolving Credit Facility was $370.0mn and the outstanding principal amount under the Term Loan Facilities was approximately $1,077.0mn.
- Senior Notes: In September 2018, Debtor LuxCo 1 and Debtor Garrett Borrowing LLC (the “Issuers”) issued €350.0mn in principal amount of senior notes (the “Senior Notes”) with Deutsche Trustee Company Limited serving as trustee (the “Indenture Trustee”), Deutsche Bank AG, as security agent and paying agent, and Deutsche Bank Luxembourg S.A., as registrar and transfer agent. Each of the Debtors guarantees the obligations under the Senior Notes. The Senior Notes bear interest at 5.125% annually and mature on October 15, 2026.
Approximate Principal Amount Outstanding (USD equivalent)2
September 27, 2023
Term A Facility
September 27, 2023
Term B Facility – euro tranche
September 27, 2025
Term B Facility – dollar
September 27, 2025
October 15, 2026
2 Assumes a conversion rate of 1.18 USD/EUR.
About the Debtors
According to the Debtors: "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."
Corporate Structure Chart (please see also Exhibit B to Deason Declaration)
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