The Garrett Motion debtors received a bid from a minority shareholder group
represented by Proskauer claiming to hold 6.4% of Garrett’s outstanding shares that briefly usurped the stalking horse bid from KPS Capital before the auction deadline on Dec. 18, according to sources. The Proskauer group includes Warlander
, Owl Creek
, Bardin Hill, Marathon Asset Management
and Cetus Capital
. The group disclosed on Dec. 21 a proposal
provided to the Garrett Motion debtors on Dec. 10.
After reviewing the Proskauer bid, KPS Capital then submitted a revised bid that was considered by the debtors to be better than the minority shareholder group’s bid, the sources said.
Another round of the auction was scheduled for Dec. 29, but it was ultimately pushed until Monday, Jan. 4, due to the holiday season, they added.
The debtors entered chapter 11
on Sept. 20 with a stalking horse bid from KPS Capital and a related plan agreed to by secured lenders. KPS Capital’s bid was subsequently increased
to $2.6 billion. Under the debtors’ proposal, the KPS sale proceeds would be used to repay creditors, and the reorganized debtors would litigate
former parent Honeywell International’s nearly $2 billion in subordinated asbestos and tax indemnification claims
and Honeywell’s entitlement to a share of the proceeds. Holders of common stock of Garrett Motion would be entitled to receive their pro rata share of all proceeds of the estate remaining after full payment of all creditors, as well as a co-investment opportunity
in new Garrett. On the basis of public information, it does not appear that KPS Capital currently has any stake in Garrett Motion securities.
A number of creditor and shareholder groups - including bidders
the debtors’ proposed stalking horse protections for KPS, but Judge Michael Wiles approved those protections and the debtors’ sale timeline - including the initial Dec. 18 auction date.
Proskauer, Owl Creek and KPS Capital did not immediately respond to requests for comment. Garrett Motion declined to comment.