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Garrett plans $700 million term loan for preferred stock repurchase
By Sara Rosenberg
New York, April 14 – Garrett Motion Inc. plans on getting a $700 million term loan B to fund the repurchase of about $280 million of series A cumulative convertible preferred stock from Centerbridge Partners LP and about $290 million of series A cumulative convertible preferred stock from Oaktree Capital Management LP, according to an 8-K filed with the Securities and Exchange Commission Friday.
The company also intends to convert all shares of its series A cumulative convertible preferred stock into shares of common stock on or about July 3. Upon the conversion, each holder of series A preferred stock will receive an amount equal to the amount of accrued and unpaid dividends on the preferred stock plus an additional amount that represents the dividends that would have accrued through Sept. 30.
The size of the term loan B is subject to reduction of up to 5% if the preferred conversion committee determines in good faith that such reduction is in the best interests of the company.
The term loan B would be done through an amendment to its existing credit agreement for which JPMorgan Chase Bank is the administrative agent.
In addition, the amendment would change the definition of restricted payment to allow for the payments contemplated by the transaction agreements.
The company has agreed to use its commercially reasonable efforts to complete the debt financing.
Garrett is a Rolle, Switzerland-based provider of passenger vehicle, commercial vehicle, aftermarket replacement and performance enhancement solutions.
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