Garrett Motion is working with Sullivan & Cromwell as legal advisor and Perella Weinberg Partners as financial advisor as it explores strategic alternatives, according to sources. The turbocharger manufacturer on Aug. 26
announced that with the assistance of advisors it is exploring alternatives for addressing its balance sheet.
The company’s $425 million L+325 basis points term loan B due September 2025 was quoted today at 91.625 at the midpoint, according to a trading desk. Its €350 million 5.125% unsecured notes due 2026
dropped from 84 to between 40 to 70 after the announcement, as reported. The company has total debt of $1.57 billion equivalent.
Garrett Motion said on June 12 that it
entered into an amendment to its credit agreement to obtain relief from certain financial covenants, including the consolidated leverage ratio, through June 30, 2022, in light of current and anticipated operating conditions. Garrett said its leverage ratio is expected to remain “high” for at least the next several quarters. The company said its “leveraged capital structure poses significant challenges to its overall strategic and financial flexibility” and may also “impair its ability to gain or hold market share in the automotive supply market, putting Garrett at a meaningful disadvantage relative to its peers.”
The company said it has “ample liquidity to support its current and future commitments to customers, suppliers, employees and other business partners without interruption,” with $482 million of
liquidity as of June 30, including $138 million of cash and $347 million of availability under its €430 million revolver due September 2023.
Garrett Motion and Sullivan & Cromwell did not immediately respond to requests for comment. A representative for Perella Weinberg Partners declined to comment.
--Millie Dent, Harvard Zhang