GTX - Garrett Motion inks deal with Centerbridge and Oaktree to convert preferred stock into common stock

2023-04-13 06:28:20 ET

• Garrett Motion ( NASDAQ: GTX ) has entered into agreements with Centerbridge Partners, L.P. and funds managed by Oaktree Capital Management, L.P. to convert all outstanding Series A preferred stock into a single class of common stock, on or about July 3, 2023, subject to certain conditions.
• The Company has agreed to repurchase ~$280M of Series A preferred stock from Centerbridge and ~$290M of Series A preferred stock from Oaktree for a total of $570M, reducing Centerbridge’s ownership from 22% to 15% and Oaktree’s ownership from 23% to 15%, each on an as-converted basis,
• The company has agreed to repurchase price of $8.10 which will be adjusted to equal the volume-weighted average price of the common stock for the fifteen trading days. Along with the repurchase price, the company shall pay preference dividends that will accrue through June 30, 2023.
• This agreement would lead to Centerbridge Partners and Oaktree reduction in governance rights, as well as lock-up and other agreements.
• The repurchases are subject to obtaining funding of approximately $700M of new debt, which is expected to be in the form of a new term loan B under the Company’s existing credit agreement, which is expected to be consummated in Q2 2023.
• The company has also announced an increase in the share repurchase authorization to $250M to repurchase shares of Series A preferred stock or common stock in open market transactions, privately negotiated purchases and other transactions from time to time.
• The elimination of the Series A preferred dividend adds over $100M of incremental annual net cash flow.
• GTX -3.4% after hours to $7.97
• Source: Press Release

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