| Item 7.01 | Regulation FD Disclosure. |
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.”
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 regarding restructuring transactions (the “Restructuring Transactions”) pursuant to a Chapter 11 plan of reorganization on the terms and conditions set forth in the Plan Support Agreement. A related Chapter 11 plan of reorganization (the “Proposed Plan”) and a related disclosure statement were filed with the Bankruptcy Court on January 22, 2021.
On January 24, 2021, representatives of the official committee of equity securities holders (the “Equity Committee”) submitted a restructuring term sheet for a proposed plan of reorganization sponsored by Atlantic Park (the “Atlantic Park Proposal”). The transactions contemplated under the Atlantic Park Proposal have been proposed as an alternative to the transactions contemplated under the Proposed Plan. In connection with the Atlantic Park Proposal, the Equity Committee filed a motion with the Bankruptcy Court seeking to modify the Debtors’ exclusive periods to file and solicit votes on a Chapter 11 plan. The Equity Committee’s motion is scheduled to be heard by the Bankruptcy Court on February 16, 2021. The Company has significant concerns with the feasibility of the Atlantic Park Proposal and has concluded that at this time the transactions contemplated under the Atlantic Park Proposal are not reasonably likely to lead to a higher and better alternative plan of reorganization as compared to the Proposed Plan.
In addition, at a status conference in the Chapter 11 Cases on January 29, 2021, counsel to the Equity Committee disclosed that, on January 28, 2021, Mr. Gregory S. Williams submitted to certain representatives of the Company’s management a letter regarding the terms set forth in the Atlantic Park Proposal and certain potential modifications thereto (the “Subsequent Letter”), including a suggestion that the Company apply up to $225 million of cash to partially repurchase shares from existing stockholders at $7.00 per share concurrently with the Company’s emergence from Chapter 11. The Company is furnishing the written materials referred to as supplemental information for investors on this Current Report but the Company has not received any formal documentation with respect to the potential terms described in the Subsequent Letter or identified a viable source of funds for the suggested partial stock repurchase in the Atlantic Park transaction and is therefore not able to make any determination with respect to the potential modifications to the Atlantic Park Proposal described in the Subsequent Letter at this time.
Copies of the Atlantic Park Proposal and the Subsequent Letter are attached as Exhibit 99.1 and 99.2, respectively, to this Current Report on Form 8-K.
Although the Company intends to pursue the transactions contemplated under the Proposed Plan and the Plan Support Agreement, there can be no assurance that the Proposed Plan will be approved by the Bankruptcy Court or that the Company will be successful in consummating the Restructuring Transactions or any other similar transaction on the terms set forth in the Proposed Plan, on different terms or at all. Bankruptcy law does not permit solicitation of acceptances of a proposed Chapter 11 plan of reorganization until the Bankruptcy Court approves a disclosure statement relating to the proposed plan. Accordingly, this Current Report on Form 8-K is not intended to be, nor should it be construed as, a solicitation for a vote on the Proposed Plan.
The information furnished pursuant to this Item 7.01, including Exhibits 99.1 and 99.2, 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.
