Garrett Motion Inc. 10-Q

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. In connection with the Company’s emergence from bankruptcy and pursuant to the Plan, all existing shares of the Company’s Old Common Stock were cancelled on the Effective Date, and the Company initially issued (i) 65,050,367 shares of the Company’s new Common Stock to holders of the Company’s Old Common Stock as of March 15, 2021, (ii) 247,768,962 shares of Series A Preferred Stock to the Centerbridge Investors, the Oaktree Investors and certain other investors and parties, including in connection with committed direct equity investments in the amount of $668.8 million in cash and the consummation of a rights offering for $632 million backstopped on a fully committed basis and (iii) 834,800,000 shares of Series B Preferred Stock to Honeywell, in consideration for a global settlement of its outstanding claims against the Company. The shares of Common Stock issued pursuant to the Plan were issued in reliance upon the exemption from the registration requirements of the Securities Act, provided by section 1145 of the Bankruptcy Code, or, only to the extent such exemption under section 1145 of the Bankruptcy Code is not available, Section 4(a)(2) of the Securities Act and the safe harbor contained in Regulation D thereunder. The shares of Series A Preferred Stock issued pursuant to the Plan were issued in reliance upon the exemption from the registration requirements of the Securities Act, provided by section 1145 of the Bankruptcy Code, or, only to the extent such exemption under section 1145 of the Bankruptcy Code is not available, Section 4(a)(2) of the Securities Act and the safe harbor contained in Regulation D thereunder. Shares of Series A Preferred Stock are also convertible into Common Stock at any time at the option of the holder, effective on January 1, April 1, July 1 and October 1 in each year, or on the third business day prior to the date of redemption of the outstanding shares of the Series A Preferred Stock as described in the following sentence. The Company may, at its election, redeem all but not less than all of the outstanding shares of Series A Preferred Stock (i) at any time following the date which is six years after the Effective Date or (ii) in connection with the consummation of a Change of Control (as defined in the Series A Certificate of Designations), in either case for a cash purchase price equal to $5.25 per share plus cumulative unpaid preference dividends (whether or not authorized or declared) as of the redemption date. The shares of Series B Preferred Stock issued pursuant to the Plan were issued in reliance upon the exemption from the registration requirements of the Securities Act, provided by section 1145 of the Bankruptcy Code, or, only to the extent such exemption under section 1145 of the Bankruptcy Code is not available, Section 4(a)(2) of the Securities Act and the safe harbor contained in Regulation D thereunder. 67 The table below sets forth the information with respect to purchases of our C ommon S tock made by or on behalf of us during the three months ended June 30, 2021: (a) Total Number of Shares (or Units) Purchased (b) Average Price Paid per Share (or Unit) (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Value (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs April 1 - 30, 2021 14,536,429 (1) $ 5.50 14,536,429 (1) — May 1 - 31, 2021 — — — — June 1 - 30, 2021 — — — — Total 14,536,429 $ 5.50 14,536,429 — (1) Number of shares or units purchased and n umber of shares or units purchased under publicly announced plans or programs include: • Cash-Out election – As part of the Plan, 11,032,225 million common shares as the Company issued 65,035,801 million shares of its new Common Stock to holders of its existing Common Stock who had not made the Cash-Out Election • RSU – As of the Effective Date, 1,205,650 RSU awards were settled for consideration of $6.25 per share, for a total cash settlement of $7.5 million. • PSU – as of the Effective Date, 228,765 PSU awards were settled for consideration of $6.25 per share, for a total cash settlement of $1.4 million. • CPSU – as of the Effective Date, 2,069,897 CPSU awards were settled for consideration $1.00 per unit, for a total cash settlement of $2 million. See Note 2, Plan of Reorganization and Note 20, Stock-Based Compensation for more discussion of these purchases. On June 11, 2021, our Registration Statement on Form S-1 was declared effective by the SEC. As the registration relates only to the offer and resale of our securities by certain holders, Garrett will not receive any proceeds of the offering. Item 3. Defaults Upon Senior Securities. Except as otherwise disclosed in this Quarterly Report on Form 10-Q or reported previously in a Current Report on Form 8-K by the Company, none. Holders of the Series A Preferred Stock will be entitled to receive, when, as and if declared by a committee of disinterested directors of the Board (which committee initially consisted of Daniel Ninivaggi, Julia Steyn, Robert Shanks and D’aun Norman) out of funds legally available for such dividend, cumulative cash dividends at an annual rate of 11% on the stated amount per share plus the amount of any accrued and unpaid dividends on such share, accumulating on a daily basis and payable quarterly on January 1, April 1, July 1 and October 1, respectively, in each year. No cash dividend was declared in respect of the period ended July 1, 2021. As a result, as of July 1, 2021, there were $24 million of unpaid cumulative preference dividends on the shares of Series A Preferred Stock outstanding as of that date. Item 4. Mine Safety Disclosures. Not applicable.