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Item 1.01
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Entry into a Material Definitive Agreement.
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As previously reported, on September 20, 2020 (the “Petition Date”), 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.” On the Petition Date, prior to the commencement of the Chapter 11 Cases, the Debtors entered into a Restructuring Support Agreement with consenting lenders (the “Consenting Lenders”) holding, in the aggregate, approximately 61% of the aggregate outstanding principal amount of loans under that certain Credit Agreement, dated as of September 27, 2018, by and among the Company, as holdings, Garrett LX III S.à r.l., as Lux Borrower, Garrett Borrowing LLC, as U.S. Co-Borrower, Garrett Motion Sàrl, as Swiss Borrower, the Lenders and Issuing Banks party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.
Also as previously announced, on January 11, 2021, the Company entered into a Plan Support Agreement (the “Plan Support Agreement”) with affiliated funds of Centerbridge Partners, L.P., affiliated funds of Oaktree Capital Management, L.P., Honeywell International Inc. and certain other investors and parties (the “CO Group”) regarding restructuring transactions pursuant to a Chapter 11 plan of reorganization on the terms and conditions set forth in the Plan Support Agreement (the “Plan”).
On February 15, 2021, the Debtors and the CO Group agreed with certain of the Consenting Lenders to amend and restate the Plan Support Agreement (as so amended and restated, the “A&R Plan Support Agreement”) to, among other things, add certain of the Consenting Lenders as parties thereto. The A&R Plan Support Agreement provides for, among other things, the reimbursement by the Debtors of professional fees and expenses of the CO Group and certain of the Consenting Lenders, subject to an interim cap on certain expenses of $25 million prior to emergence from the Chapter 11 Cases (“Emergence”), with the balance to be paid at Emergence. As of February 15, 2021, the CO Group has estimated that the aggregate amount of professional fees and expenses expected to be payable by the Debtors under the Plan Support Agreement (inclusive of any amounts payable prior to Emergence) was approximately $82 million.
The Debtors’ entry into and performance and obligations under the A&R Plan Support Agreement are subject to approval by the Bankruptcy Court and other customary closing conditions.
The foregoing description of the A&R Plan Support Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the A&R Plan Support Agreement, which is furnished as Exhibit 10.1 hereto and incorporated herein by reference.
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.