Garrett Motion: Unaudited Pro Forma Condensed Consolidated Financial Information

The following excerpt is from the company's SEC filing.
On September 20, 2020 (the “Petition Date”), Garrett Motion Inc. (the “Company”) and certain of its subsidiaries (collectively, the
“Debtors”) each filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the
“Bankruptcy Court”). The Debtors’ Chapter 11 Cases (the “Chapter 11 Cases”) are jointly administered under the caption “In re Garrett Motion Inc.,
20-12212.”
On
April 20, 2021, the Debtors filed the Revised Amended Plan of Reorganization (the “Plan”). On April 2 6, 2021, the Bankruptcy Court entered an order (the “Confirmation Order”) among other things, confirming the Plan. On
April 30, 2021 (the “Effective Date”), the conditions to effectiveness of the Plan were satisfied or waived and the Company emerged from bankruptcy. Terms not defined herein are defined in the Plan, which was filed on Exhibit 2.1 to
the Company’s Current Report on Form
on April 27, 2021.
On the Effective Date, pursuant to the
Plan:
All shares of the common stock of the Company outstanding prior to the Effective Date (the “Old Common
Stock”) were cancelled;
The Company paid $69 million to holders of Old Common Stock who had made the

cash-out
election under the Plan (the
“Cash-Out
Election”);
The Company issued 65,035,081 shares of its new common stock (the “Common Stock”), to holders of the
Old Common Stock who had not made the
election under the Plan in consideration of the cancellation of the Old Common Stock;
The Company issued 247,768,962 shares of its new convertible series A preferred stock (the “Series A
Preferred Stock”) to the parties to the Plan Support Agreement, the Backstop Commitment Agreement and participants in a rights offering by the Company for aggregate consideration of $1,301 million;
The Company issued 834,800,000 shares of its new series B preferred stock (the “Mandatorily Redeemable
Preferred B Stock”) to Honeywell International Inc. (“Honeywell”) in satisfaction and discharge of certain claims of Honeywell, which shares are to be redeemed in installments of $35 million in 2022 and $100 million annually
in 2023-2030;
The Company also paid $375 million to Honeywell in addition to the issuance of the Series B preferred stock
in satisfaction and discharge of certain claims of Honeywell;
The Company may grant up to 10% of the equity in the reorganized Company (on a fully-diluted basis) from time to
time to the directors, officers and other employees of the reorganized Company;
The Company paid in full $101 million of interest and principal outstanding on, and terminated, that certain
Senior Secured Super-Priority
Debtor-in-Possession
Credit Agreement (the

“Debtor-in-possession
Term Loan”);
The obligations of the Debtors under the Credit Agreement, dated as of September 27, 2018, by and among the
Company, as holdings, Garrett LX III S.à r.l., as Lux Borrower, Garrett Borrowing LLC, as U.S.
Co-Borrower,
Garrett Motion Sàrl (f/k/a Honeywell Technologies Sàrl), as Swiss Borrower, the
Lenders and Issuing Banks party thereto and the Prepetition Credit Agreement Agent (as defined in the Plan), as Administrative Agent, as amended, restated, supplemented or otherwise modified from time to time in accordance with its terms (the
“Prepetition Credit Agreement”) were cancelled, the applicable agreements governing such obligations were terminated and holders of Allowed Prepetition Credit Agreement Claims (as defined in the Plan) received payment in cash in an amount
equal to such holder’s Allowed Prepetition Credit Agreement Claim. With respect to the Prepetition Credit Agreement:
The Company repaid its outstanding principal balance and accrued

pre-petition
interest ($303 million as of March 31, 2021) on its five-year term A loan facility (the “Old Term A Facility”); and
The Company repaid its outstanding principal balance ((i) €309 million with respect to the EUR tranche,
or, $364 million at $1.178/€, and (ii) $416 million with respect to the USD tranche, in each case as of March 31, 2021) on its five-year term B loan facility (the “Old Term B Facility”); and
The Company repaid its outstanding principal balance and accrued interest ($374 million as of March 31,
2021) on its revolving credit facility (the “Old Revolving Facility”);
The obligations of the Debtors under that certain Indenture, dated as of September 27, 2018, among the
Company, as Parent, Garrett LX I S.à r.l., as Issuer, Garrett Borrowing LLC, as
Co-Issuer,
the guarantors named therein, Deutsche Trustee Company Limited, as Trustee, Deutsche Bank AG, as Security Agent
and Paying Agent, and Deutsche Bank Luxembourg S.A., as Registrar and Transfer Agent, as may be amended, supplemented or otherwise modified from time to time (the “Indenture”), were cancelled, the applicable agreements governing such
obligations were terminated and holders of Allowed Prepetition Credit Agreement Claims (as defined in the Plan) received payment in cash in an amount equal to such holder’s Allowed Senior Subordinated Noteholder Claims (as defined in the Plan).
With respect to the Indenture and the Allowed Senior Subordinated Noteholder Claims, the Company repaid its outstanding principal balance of €350 million, or $412 million at $1.178/€ (the “Senior Notes”) and
accrued
interest of $9 million included in the Company’s historical balance sheet as of March 31, 2021, as well as a settlement payment of $15 million, and post-petition
interest of $19 million (through March 31, 2021);
The Company entered into a Credit Agreement, by and among the Company, Garrett LX I S.à r.l. (the
“Lux Borrower”), Garrett Motion Holdings Inc. (the “U.S.
Co-Borrower”)
and Garrett Motion Sàrl (the “Swiss Borrower”), the lenders and issuing banks party thereto and
JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”), which provides for senior secured financing consisting of:
a seven-year senior secured first-lien U.S. dollar term loan facility in an aggregate principal amount of
$715 million (the “Dollar Facility”);
a seven-year senior secured first-lien Euro term loan facility in an aggregate principal amount of
€450 million (the “Euro Facility” and, together with the Dollar Facility, the “Term Loan Facilities”), which as of March 31, 2021, had a value of $530 million at $1.178/€; and
an undrawn five-year senior secured first-lien revolving credit facility with aggregate commitments of
$300 million providing for multi-currency revolving loans to Swiss Borrower (the “New Revolving Facility” and, together with the Term Loan Facilities, the “Credit Facilities”);
The proceeds drawn under the Credit Agreement were reduced by debt issuance costs of $46 million, and
deferred financing costs of $26 million on repaid historical debt were expensed;
The Company paid or will pay certain
claims, transaction
fees, stock incentive payments and other expenses incurred in connection with the Plan;
(collectively, the “Transactions”).

The following unaudited pro forma condensed consolidated balance sheet as of March 31, 2021 gives effect to the Transactions as if they had occurred
on March 31, 2021. The following unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2021 and the year ended December 31, 2020 give effect to the Transactions as if they had
occurred on January 1, 2020. The unaudited Pro Forma Financial Statements set out below have been prepared in accordance with Article 11 of Regulation
as amended by the Securities and Exchange
Commission Final Rule Release
No. 33-10786,
Amendments to Financial Disclosures About Acquired and Disposed Businesses using accounting policies in accordance with principles generally accepted in the
United States of America.
All significant pro forma adjustments and their underlying assumptions are described more fully in the notes to the
Company’s unaudited pro forma condensed consolidated statements of operations and unaudited pro forma condensed consolidated balance sheet and should be read in conjunction with such unaudited pro forma condensed consolidated statements of
operations and unaudited pro forma condensed consolidated balance sheet.
The historical data provided for the period from January 1, 2021 through
March 31, 2021 is derived from the Company’s unaudited consolidated financial statements and should be read in

conjunction with “
Management’s Discussion
 & Analysis of Financial Condition and Results of Operations
” and the consolidated financial statements and
notes included in the Company’s Quarterly Report on
Form 10-Q for
the quarter ended March 31, 2021. The historical data provided for the year ended December 31, 2020 is derived from
the Company’s audited consolidated financial statements and should be read in conjunction with “
,” and the
consolidated financial statements and notes included in the Company’s Annual Report on
Form 10-K for
the year ended December 31, 2020.
The following unaudited pro forma condensed consolidated statements of operations and unaudited pro forma condensed consolidated balance sheet are provided
for illustrative purposes only and are based on available information and assumptions that the Company’s management believes are reasonable. They do not purport to represent the Company’s actual results of operations or financial position
would have been had the Transactions occurred on the dates indicated, or on any other date, nor do they purport to project the Company’s results of operations or financial position for any future period or as of any future date. The
Company’s actual results of operations and financial position after the Effective Date will differ, perhaps significantly, from the pro forma amounts reflected herein due to a variety of factors, including access to additional information,
changes in value or allocation of value not currently identified and changes in the Company’s operating results following the date of the unaudited pro forma condensed consolidated statement of operations and unaudited pro forma condensed
consolidated balance sheet.
Dollars are in millions except for share and per share amounts. Some amounts discussed in the footnotes to the pro forma
condensed consolidated statement of operations and unaudited pro forma condensed consolidated balance sheet may not agree to the adjustments in total due to rounding.
Reorganization Pro Forma Adjustments
At the Effective
Date, we did not meet the requirements under ASC 852 for fresh start accounting. Fresh start accounting requires the debtor to use current fair values in its balance sheet for both assets and liabilities upon emergence and to eliminate all prior
earnings or deficits if both of the following requirements to fresh start accounting are met:
i) The reorganization value of the assets
of the emerging entity immediately before the date of confirmation of the plan of reorganization is less than the total of all post-petition liabilities and allowed claims; and
ii) The holders of existing voting shares immediately before confirmation of the plan of reorganization receive less than 50% of the voting
shares of the emerging entity.
Based on the Company’s analysis, the Company did not meet all the criteria as stated above, and therefore did not
apply fresh start accounting in preparing the following unaudited pro forma condensed consolidated statement of operations and unaudited pro forma condensed consolidated balance sheet.
GARRETT MOTION INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 2021
(Dollars in millions)
Transaction Accounting Adjustments
March 31, 2021
As Reported
Financing
Claims and
Pro forma as of
ASSETS
Current Assets:
Cash and cash equivalents
(2,645
Restricted cash
Accounts, notes and other receivables – net
Inventories - net
Other current assets
Total current assets
(2,677
Investments and long-term receivables
Property, plant and equipment – net
Goodwill
Deferred income taxes assets
Other assets
Total assets
(2,673
LIABILITIES
Current liabilities
Accounts payable
Borrowings under revolving credit facility
Current maturities of long-term debt
Term
Loan
Mandatorily Redeemable Preferred B Stock - Current
Accrued liabilities
Total current liabilities
Long-term debt
(1,049
Other Liabilities
Liabilities not subject to compromise
Liabilities subject to compromise
(2,107
Total liabilities
(2,914
COMMITMENTS AND CONTINGENCIES
EQUITY (DEFICIT)
Series A Preferred Stock
Common stock
Additional
paid-in
capital
Retained Deficit
(2,312
(2,071
Accumulated other comprehensive loss
Total equity
(2,300
Total liabilities and equity
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended March 31, 2021
Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Other expense
Interest expense
Non-operating
Reorganization items - net
(Loss) income before taxes
Tax expense
Net (loss) income
Less: Preferred dividend
Net (loss) income available to common shareholders
Earnings (loss) per common share
Diluted
Weighted average common shares outstanding
75,904,898
65,035,801
For the twelve months ended December 31, 2020
December 31, 2020
Income (Loss) before taxes
Net Income (loss)
Net income(loss) available to common shareholders
Earnings per common share
75,543,461
64,511,236
76,100,509
65,068,284
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
Reorganization Adjustments
[a] Cash and cash equivalents

The adjustments to cash and cash equivalents as of March 31, 2021, are as follows:
(Dollars in millions)
Credit Facilities, net of debt issuance costs and original issuance discount
Net Financing adjustments
Repayment of Old Term Loan B Facility and accrued

Repayment of Old Term Loan A Facility and accrued

Repayment of Senior Notes, accrued
interest,
accrued post-petition interest and make-whole settlement
Settlement of certain claims of Honeywell
Repayment of Old Revolving Facility and accrued interest
Advisory and agency rating fees
Repayment of

Term Loan and accrued interest
Payment to holders who had made the shareholder

Election
Payment of prepetition vendor claims
Repayment of hedge claim
Payout of incentive shares
Net Claims and Other adjustments
[b] Other current assets
The
$32 million adjustment is to primarily expense $26 million unamortized Directors & Officers insurance premiums as a result of the emergence from the Chapter 11 proceedings. The Directors & Officers insurance policy
satisfied an obligation to directors and officers to provide sufficient coverage during the reorganization period prior to the Effective Date, and is not applicable to the reorganized entity. In addition, the adjustment includes $6 million to
expense unamortized deferred financing costs on the Old Revolving Facility.
[c] Accounts Payable
The $51 million adjustment reflects a payment of $57 million in Advisor fees, offset by $6 million in reinstatements from Liabilities Subject
to Compromise to Accounts payable (see note [a] and [l]).
[d] Old Revolving Facility
This adjustment represents repayment of $370 million in outstanding post-petition principal balance in accordance with the Plan. See note [h] for accrued

interest of $4 million related to Old Revolving Facility.
[e] Long-term Debt
Long-term debt as of March 31, 2021 is adjusted as follows:
Term Loan B Facility (USD)
Term Loan B Facility (EUR)
Term Loan B Underwriting Fees and OID (EUR

and USD)
Repayment of Prepetition Debt
Old Term Loan B Facility (USD)
Deferred financing costs
(1,055
Foreign exchange rate of
$1.178/€ used is as of
March 31, 2021.
Of the $1,199 million of Net Financing adjustments, $3 million is current and $1,196 million is
non-current.
Of the ($1,055 million) of Net Claims and Other adjustments, ($6 million) is current and ($1,049) million is
Of the pro forma adjusted Long term debt
balance, $3 million is current as of March 31, 2021.
The adjustment represents repayment of the
$100 million outstanding principal balance of the
Term Loan.
[g] Mandatorily Redeemable Preferred B Stock
As a part of
settlement of Honeywell claims, Honeywell received shares of Mandatorily Redeemable Preferred Series B Stock to be redeemed in installments of $35 million in 2022, and $100 million annually from 2023 to 2030. The Company has an option to
prepay the Mandatorily Redeemable Preferred B Stock in full at a call price equivalent to $584 million as of the emergence (representing the present value of the installments at a 7.25%) discount rate. Of the pro forma balance as of
March 31, 2021, $35 million is considered current, and $549 million is considered
[h] Accrued liabilities
The $22 million in adjustments includes $8 million in tax adjustments to reflect the tax effects of the Transactions and other pro forma
adjustments,
re-payment
of accrued
interest of $4 million on its Old Revolver Facility, payment of $2 million related to hedge liabilities (see
note [k]) and $1 million on its
Term Loan, and $8 million in accrued interest on Old Term Loan A Facility and Old Term Loan B Facility;
less by $45 million (see note [l]) in reinstatement from Liabilities Subject to Compromise (“LSTC”) to accrued liabilities balances related to warranties, leases, pension, freight, supplier discounts and short-term of environmental
liability to accrued liabilities.
[i] Not used.
[j]
Deferred income taxes
The net adjustment of $9 million ($13 million increase in deferred tax liability less a $4 million increase in
deferred tax assets) is primarily related to $16 million in reinstatement of Deferred income tax LSTC to Deferred income taxes partially offset by $7 million in tax adjustments.
[k] Other liabilities
The adjustment of $150 million
includes $168 million for reinstatement of certain liabilities such as uncertain tax obligation, pension, freight, warranties, supplier discounts and short-term portion of environmental liability to other liabilities at full recovery rate,
offset by repayment of hedge claim for $18 million (see note [h]).
[l] Liabilities Subject to Compromise
The elimination of LSTC as of March 31, 2021 is adjusted at $2,107 million. The adjustments are as follows:
LSTC - Cash Settlement
Senior notes and accrued interest
Settlement of Honeywell indemnity claims
Total Cash Settlement
LSTC – Obligations payable to Honeywell
Reorganization gain on settlement with Honeywell
LSTC -–Reinstatement under the Plan
Total reinstated liabilities
Loss on settlement of Term Loan and accrued liabilities
Reclassification of LSTC to Accounts payable
Net Liabilities subject to compromise adjustments
[m] Not used.
[n] Additional
capital
Series A Preferred Stock was issued on the Effective Date for gross proceeds of $1,301 million.
[o] Retained Deficit
The pro forma net increase to retained
earnings as of March 31, 2021 is estimated at $241 million.
Gain on settlement of Honeywell
claims
Advisor Fees, including amounts already accrued
Effect of cash out on
pre-existing
common
stockholders
Loss on settlement of senior notes
Accrual of remainder of Director & Officers insurance premium
Expense deferred financing costs
Tax effects of the Transactions
Adjustment to Retained Deficit
Remaining LSTC related to certain Honeywell claims of $1,422 million less $375 million cash
settlement of Honeywell indemnity claims and issuance of $584 million in Mandatorily Redeemable Preferred B Stock.
[p] Interest
expense
For the three months ended March 31, 2021 the adjustment is to:
Remove interest expense of $19 million and amortization of debt issuance cost of $2 million related to
historical debt which was repaid and is thus
non-recurring;
Add recurring interest on the Credit Facilities of $10 million,

non-cash
accretion of interest on the Mandatorily Redeemable Preferred B Stock of $11 million, and
amortization of deferred financing costs and
underwriting fees of $2 million.
For the twelve months ended December 31, 2020 the adjustment is to:
Remove interest expense of $72 million and amortization of debt issuance cost of $7 million related to
historical debt which was repaid and is thus
Add recurring interest on the Credit Facilities of $42 million,

accretion of interest on the Mandatorily Redeemable Preferred B Stock of $42 million, and
amortization of deferred financing costs and
underwriting fees of $7 million.
[q] Reorganization items, net
For the twelve months ended December 31, 2020 the adjustment is to include the following

adjustments which were made to the unaudited pro forma condensed consolidated balance sheet:
Remaining LSTC related to Honeywell indemnity claims of $1,422 million less $375 million cash
settlement of Honeywell indemnity claims and payment of $584 million in Mandatorily Redeemable Preferred B Stock.
[r] Tax expense

For the three months ended March 31, 2021 tax adjustments reflect the tax effects of the Transactions and other pro forma adjustments, which are
either recurring or
as indicated in the respective footnote description.
For the twelve months
ended December 31, 2020 tax adjustments reflect the tax effects of the Transactions and other pro forma adjustments, which are either recurring or
as indicated in the respective footnote
description.
[s] Series A Preferred Stock dividends
The
Series A Preferred Stock, with a value of $1,301 million, accrues a dividend of 11%, or $143 million, annually. No cash dividend is payable unless, among other things, it is declared by a committee of disinterested directors, and dividends
will accrue whether or not declared and paid. For the three months ended March 31, 2021, the recurring adjustment is to reflect a Series A Preferred Stock dividend of $36 million.
For the twelve months ended December 31, 2020, the recurring adjustment is to reflect a Series A Preferred Stock cash dividend of $143 million.
[t] Basic and Fully Diluted Outstanding Shares
Basic and
diluted earnings per share includes a
reduction of 11,032,225 million common shares as the Company issued 65,035,801 million shares of its New Common Stock to holders of the Old Common
Stock who had not made the
Election. Basic and diluted

earnings per share do not include the 247,768,962 million of Series A Preferred Stock shares issued as part of the Transactions, as they were anti-dilutive, as follows:
For the three months ended March 31, 2021, the weighted average price of the Company’s common stock was
$5.20 per share, compared to the conversion price of $5.25 per share of Series A Preferred Stock on the Effective Date.
For the twelve months ended December 31, 2020, the weighted average price of the Company’s common stock
was $4.50 per share, compared to the conversion price of $5.25 per share of Series A Preferred Stock on the Effective Date.

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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