Garrett Motion Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report (Form 8-K) was filed by Garrett Motion Inc. on September 21, 2018. The filing details the entry into a material definitive agreement regarding a new debt offering and the pricing of senior notes following the company's separation from Honeywell International Inc.
Key Financial Metrics and Transaction Details
- Debt Issuance: The company agreed to sell €350 million aggregate principal amount of 5.125% Senior Notes due 2026.
- Interest Rate: 5.125% per annum.
- Maturity Date: October 15, 2026.
- Issue Price: 100% of principal.
- Expected Closing: September 27, 2018.
- Use of Proceeds: Net proceeds, combined with borrowings from new credit facilities, will be used to repay approximately $1.6 billion in intercompany indebtedness to Honeywell or its subsidiaries, and to pay transaction fees and expenses.
- Adjustments: The principal amount of the Notes was reduced by €100 million from the initial launch size; term loans under new credit facilities are expected to increase by a corresponding amount.
Material Changes and Structure
The transaction represents a significant capital structure change as the company establishes its independent financing post-separation. The Notes are guaranteed on a senior subordinated basis by Garrett Motion Inc., its domestic subsidiaries, and certain foreign subsidiaries. The Notes are secured by security interests in equity of a wholly owned subsidiary and an unsecured intercompany loan, ranking junior to security interests granted for the new credit facility.
Outlook, Risks, and Contingencies
The filing notes that the transaction is subject to closing conditions customary for this type of transaction. There is no assurance that the transactions will be completed in the manner described. The Notes were offered to qualified institutional buyers under Rule 144A and to non-U.S. persons under Regulation S, and are not registered under the Securities Act of 1933.
Key Facts for Investor Verification
- Confirm the final closing date of the €350 million Notes offering (expected September 27, 2018).
- Verify the exact amount of intercompany debt to Honeywell being repaid with the proceeds.
- Review the terms of the new credit facilities mentioned as a source of funds alongside the Notes.
- Check for any subsequent filings regarding the joinder of additional subsidiaries as guarantors within 120 days.