Blog: GARRETT MOTION INC. : Bankruptcy or Receivership, Regulation FD Disclosure, Financial Statements and Exhibits (form 8-K) – marketscreener.com

Item 1.03 Bankruptcy or Receivership.

As previously reported, on September 20, 2020, Garrett Motion Inc. (the
“Company”) and certain of its subsidiaries (collectively, the “Debtors”) each
filed a voluntary petition for relief under chapter 11 of title 11 of the United
States Code in the United States Bankruptcy Court for the Southern District of
New York (the “Bankruptcy Court”). The Debtors’ Chapter 11 cases (the “Chapter
11 Cases”) are being jointly administered under the caption “In re Garrett
Motion Inc., 20-12212.” Also as previously announced, on April 20, 2021, the
Debtors filed an amended Chapter 11 plan of reorganization (the “Plan”) and on
April 22, 2021, the Company filed an amended supplement to the Plan (the “Plan
Supplement”) with the Bankruptcy Court.

On April 26, 2021, the Bankruptcy Court entered an order (the “Confirmation
Order”) among other things, confirming the Plan. A copy of the Confirmation
Order, with a copy of the Plan as confirmed attached thereto, is attached
as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by
reference. Capitalized terms used but not otherwise defined in this Current
Report on Form 8-K have the meanings given to them in the Plan. The Plan
incorporates by reference certain documents filed with the Bankruptcy Court as
part of the Plan Supplement as the same has been amended from time to time prior
to confirmation of the Plan and may be further amended prior to the effective
date of the Plan (the “Effective Date”).

The Company expects that the Effective Date will occur as soon as all conditions
precedent to the Plan have been satisfied or waived, and is currently targeting
an Effective Date occurring on or around April 30, 2021. Although the Company is
targeting occurrence of the Effective Date as soon as reasonably practicable,
the Company can make no assurances as to when, or ultimately if, the Plan will
become effective. It is also possible that technical amendments could be made to
the Plan prior to the Effective Date.

The following is a summary of the material terms of the Plan. This summary
describes only certain substantive provisions of the Plan and is not intended to
be a complete description of the Plan. This summary is qualified in its entirety
by reference to the full text of the Plan and the Confirmation Order.

Pursuant to the Plan, the Company will:



  •   pay in full:




  •   all Allowed DIP Claims;




  •   all Allowed Prepetition Credit Agreement Claims;




  •   all Allowed Senior Subordinated Noteholder Claims;




    •     pay in full, Reinstate or otherwise render unimpaired all Allowed General
          Unsecured Claims;




    •     pay $375 million in Cash and issue the Series B Preferred Stock in full
          and final satisfaction of all Honeywell Plan Claims;




    •     pay to each Holder of an Allowed Section 510(b) Claim, if any, (a) its
          Pro Rata share of the aggregate Cash payments received or recoverable
          from any Insurance Policies on account of any Allowed Section 510(b)
          Claims and (b) solely to the extent that such payments are less than the
          amount of its Allowed 510(b) Claim, payment in full of the remaining
          amount of its Allowed 510(b) Claim, at the option of the Reorganized
          Debtors, in cash or a number of shares of GMI Common Stock at a value of
          $6.25 per share;

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    •     issue to each Holder of Existing Common Stock its Pro Rata share
          (determined with respect to all Holders of Existing Common Stock) of the
          Subscription Rights and, depending on the election of each Holder of
          Existing Common Stock:




           •     if such Holder elects the Cash-Out Option, pay each Holder of
                 Existing Common Stock the 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);




           •     if such Holder does not elect the Cash-Out Option, issue to each
                 Holder of Existing Common Stock a number of shares of GMI Common
                 Stock equal to the number of shares of Existing Common Stock held
                 by such Holder;




    •     in order to raise funding for the foregoing payments and to provide
          financing to the Company following the Effective Date:




           •     issue to the Plan Sponsors a number of shares of Convertible
                 Series A Preferred Stock at a purchase price of $668.8 million in
                 Cash, in the aggregate, consistent with and subject to the terms
                 of the Plan Support Agreement and the Equity Commitment Letters;




           •     implement the Rights Offering in accordance with the Equity
                 Backstop Commitment Agreement and the Rights Offering Procedures
                 and issue to those parties that exercise their Subscription Rights
                 and the Equity Backstop Parties, as applicable, a number of shares
                 of Convertible Series A Preferred Stock at a purchase price of
                 $632 million in Cash, in the aggregate; and




           •     enter into the Exit Facility Documents for Exit Facilities
                 consisting of a $1,250 million term loan facility and a
                 $300 million revolving credit facility.

As of March 15, 2021, the Company had 76,068,026 issued and outstanding shares
of Existing Common Stock. Pursuant to the Plan, the Company will, as of the
Effective Date: (a) cancel all outstanding shares of Existing Common Stock,
(b) issue approximately 247,771,428 shares of Convertible Series A Preferred
Stock; (c) issue 834,800,000 shares of Series B Preferred Stock; (d) issue
approximately 65,036,036 shares of GMI Common Stock on account of the shares of
Existing Common Stock for which the Cash-Out Option was not elected; (e) reserve
for issuance up to approximately 247,771,428 shares of GMI Common Stock on
account of the conversion of the Convertible Series A Preferred Stock, which
share reserve shall be subject to change in accordance with the terms of the
Convertible Series A Preferred Stock; and (f) reserve for issuance up to
approximately 31,280,746 shares of GMI Common Stock on account of an equity
incentive plan, the terms and conditions of which will be determined following
the Effective Date. As authorized by the Plan, the Company intends to adopt a
new amended and restated certificate of incorporation to increase its authorized
share capital in order to permit such issuances and reservations for issuance
pursuant to the Plan. Approximately 11,031,990 shares of Existing Common Stock
will be canceled pursuant to the Cash-Out Option, for which the Company expects
to pay the holders of such Existing Common Stock an aggregate Cash-Out
Consideration of approximately $69 million.

As of the Effective Date, the Company expects to have an aggregate of
approximately 247,771,428 shares of Convertible Series A Preferred Stock issued
and outstanding, 834,800,000 shares of Series B Preferred Stock issued and
outstanding and approximately 65,036,036 shares of GMI Common Stock issued and
outstanding. In addition, the Company expects to have approximately 31,280,746
shares of GMI Common Stock reserved for issuance under the equity incentive
plan.

Information regarding the assets and liabilities of the Company as of the most
recent practicable date is hereby incorporated by reference to the Company’s
Annual Report on Form 10-K for the period ended December 31, 2020, filed with
the Securities and Exchange Commission on February 16, 2021.

Item 7.01 Regulation FD Disclosure.

On April 23, 2021, the Company issued a press release announcing the entry of
the Confirmation Order. A copy of the press release is attached as Exhibit 99.1
to this Current Report on Form 8-K and is incorporated herein by reference.

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.

——————————————————————————–

Cautionary Information Regarding Trading in the Company’s Securities.

The Company’s securityholders are cautioned that trading in the Company’s
securities during the pendency of the Chapter 11 Cases is highly speculative and
poses substantial risks. Trading prices for the Company’s securities may bear
little or no relationship to the actual recovery, if any, by holders thereof in
the Company’s Chapter 11 Cases. Accordingly, the Company urges extreme caution
with respect to existing and future investments in its securities.

Forward-Looking Statements.

This Current Report on Form 8-K and the exhibit hereto may contain
“forward-looking statements” within the meaning of Section 21E of the Exchange
Act. All statements, other than statements of fact, that address activities,
events or developments that the Company or the Company’s management intend,
expect, project, believe or anticipate will or may occur in the future are
forward-looking statements. Although the Company believes 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
the Company’s annual report on Form 10-K for the year ended December 31, 2020,
as well as the Company’s 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 the Company’s forward-looking statements.

Non-Solicitation

This Current Report on Form 8-K shall not constitute an offer to sell or a
solicitation of an offer to buy securities, and shall not constitute an offer,
solicitation or sale in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of that jurisdiction.

Item 9.01 Financial Statements and Exhibits.



Exhibit No.                                  Description

 2.1                Order of the Bankruptcy Court, dated April 26, 2021, confirming
                  the Chapter 11 Plan of Reorganization of the Debtors.

99.1                Press release, dated April 23, 2021.

104               Cover Page Interactive Data File (embedded within the Inline XBRL
                  document).

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