Garrett Motion ups spread on $700 million term B to SOFR plus 450 bps

By Sara Rosenberg

New York, April 27 – Garrett Motion Inc. increased pricing on its $700 million term loan B (//BB+) to SOFR plus 450 basis points from SOFR plus 400 bps, according to a market source.

Also, the original issue discount on the term loan widened to 96.5 from 98 and the 101 soft call protection was extended to one year from six months, the source said.

In addition, the maturity on the term loan was shortened to April 2028 from seven years, and amortization was increased to 7.5% in years one and two and 10% in years three, four and five from 1% per annum.

The term loan still has a 0.5% floor.

JPMorgan Chase Bank is the lead on the deal.

Recommitments were scheduled to be due at 11:30 a.m. ET on Thursday, the source added.

Proceeds will be used 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, and the conversion of the company’s series A cumulative convertible preferred stock into shares of common stock.

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.

Along with the new term loan, the company is seeking an amendment to its existing credit agreement to change the definition of restricted payment to allow for the payments contemplated by the transaction agreements, and to transition its existing U.S. loan to SOFR from Libor.

Garrett is a Rolle, Switzerland-based provider of passenger vehicle, commercial vehicle, aftermarket replacement and performance enhancement solutions.

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