Garrett Motion’s official committee of equity holders has filed a disclosure statement and plan of reorganization, setting up a battle over how the debtor will be reorganized.
The equity committee has long criticized Garrett’s restructuring proposal, centered on an agreement with Centerbridge Partners, Oaktree Capital Management and former parent Honeywell International (COH group) that would provide the company with a USD 1.05bn equity investment, a USD 200m rights offering, a settlement with Honeywell, and payment in full of all other creditors, plus the right for shareholders to cash out at USD 6.25 per share. The proposed recoveries under the COH group’s plan are noted below.
The committee has now proposed its own plan, which it has described over the past few weeks as a “far superior” plan. All non-Honeywell creditors would still be paid in full but backing the plan would instead be an USD 800m equity commitment backstopped by Atlantic Park and a commitment for USD 1.5bn in term loans and a USD 350m revolver from Credit Suisse. Common stockholders would be unimpaired or have the option to cash out at USD 7 per share. If the total cash out pool exceeded USD 225m, stockholders opting to cash out would share USD 225m.
“The clear superiority of the equity committee’s plan – and the coercive nature of the debtors’ plan – cannot be reasonably disputed,” the committee argued.
The parties are set to appear in court this afternoon for a discovery conference at 2.30pm ET. Debtwire will be live blogging the hearing.
The equity committee is pursuing a motion to terminate Garrett’s exclusive plan filing periods, up for consideration at a 16 February hearing. At that hearing Judge Michael Wiles of the US Bankruptcy Court for the Southern District of New York will also consider the disclosure statement for Garrett’s plan.
Garrett’s shares closed trading on Friday (5 February) at USD 6.51 per share with a market capitalization of USD 493.38m.
by Pat Holohan