| Item 7.01 | Regulation FD Disclosure. |
As previously disclosed, 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 (the “Bankruptcy 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 disclosed, on the Petition Date, prior to commencement of the Chapter 11 Cases, certain of the Debtors (the “Sellers”) entered into a share and asset purchase agreement (the “Stalking Horse Purchase Agreement”) with AMP Intermediate B.V. (the “Stalking Horse Bidder”) and AMP U.S. Holdings, LLC, each affiliates of KPS Capital Partners, LP (together with its affiliates, as applicable, “KPS”), pursuant to which the Stalking Horse Bidder has agreed to purchase, subject to the terms and conditions contained therein, all of the equity interests in each of Garrett LX I S.à r.l. and Garrett Transportation I Inc. (subject to an election by the Stalking Horse Bidder to purchase substantially all of the assets and assume substantially all of the liabilities of Garrett Transportation I Inc., instead of its equity) and certain other assets and liabilities of the Debtors (collectively, the “Acquired Assets”) pursuant to a plan of reorganization under the Bankruptcy Code. On October 19, 2020, the Company received a further proposal from the Stalking Horse Bidder regarding certain proposed amendments to the terms of the Stalking Horse Purchase Agreement (the “Stalking Horse Bidder Revised Proposal”). The acquisition of the Acquired Assets pursuant to the Stalking Horse Purchase Agreement is subject to approval of the Bankruptcy Court and an auction to solicit higher or otherwise better bids pursuant to the bidding procedures order entered by the Bankruptcy Court on October 24, 2020 (the “Bidding Procedures Order”). Under the Bidding Procedures Order, the Stalking Horse Purchase Agreement serves as the minimum or floor bid on which the Debtors, their creditors, suppliers, vendors, and other bidders may rely.
Following the Debtors’ request for proposed amendments to improve the Stalking Horse Purchase Agreement, including amendments reflecting the terms of the Stalking Horse Bidder Revised Proposal, on November 23, 2020, the Stalking Horse Bidder delivered to the Company an executed proposed amended and restated Stalking Horse Purchase Agreement (the “Proposed A&R Stalking Horse Purchase Agreement”), attached as Exhibit 99.1 hereto. In particular, the Proposed A&R Stalking Horse Purchase Agreement reflects the following proposed amendments to the Stalking Horse Purchase Agreement:
| | • | | Assumption by the Stalking Horse Purchaser at closing of all customer, supplier, trade, vendor, employee, pension, regulatory, environmental and other liabilities of the Debtors and their worldwide subsidiaries, other than (i) debt for borrowed money and related hedging and other financial obligations, (ii) certain allowed claims by, or liabilities owed to, Honeywell International Inc. and its affiliates (including spin-off related claims) and (iii) certain other miscellaneous liabilities to be paid by the Debtors’ upon winding up of their bankruptcy estates; |
| | • | | Increase in the purchase price for the Acquired Assets (which are amended to include the residual interest in the wind-down estate of Garrett ASASCO Inc.) from $2.1 billion to $2.6 billion, in each case subject to adjustment; and |
| | • | | Offer of $350 million of the purchase consideration in the form of equity in the reorganized Garrett business (at the same per share price as KPS and any other equity financing sources), to be distributed to stockholders of the Company or other stakeholders in lieu of cash at the election of the offerees, in accordance with the plan of reorganization. |
The terms of the Proposed A&R Stalking Horse Agreement are intended to implement the Stalking Horse Bidder Revised Proposal and make further negotiated improvements at the request of the Debtors. The transactions contemplated by the Proposed A&R Stalking Horse Purchase Agreement remain subject to the Bankruptcy Court-approved bid procedures and auction process, the Company’s decision to proceed in light of available alternatives, Bankruptcy Court approval, customary regulatory approvals, and other customary conditions.
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.
