Research Update: U.S. -Incorporated Auto Supplier Garrett Motion Inc. Assigned 'B+' Rating; Outlook Stable

The Chapter 11 plan of Garrett Motion Inc. (GMI) and its affiliated debtors, sponsored by the new main shareholders Oaktree Capital Management L.P. (23.2% voting rights) and Centerbridge Partners L.P. (23% voting rights) was implemented with no major deviation. We forecast S&P Global Ratings-adjusted debt to EBITDA of about 7.2x-7.5x in 2021 and 6.0x-6.2x in 2022--about 4.5x-4.7x and 3.8x-4.0x, respectively, excluding approximately $1.3 billion of convertible series A preferred stock (preference shares A), which we view as debt-like under our criteria, although we acknowledge it has certain equity characteristics. We assigned a long-term 'B+' issuer credit rating to GMI and a 'B+' issue rating to the seven-year $1.25 billion senior secured term loan B (TLB) and the five-year $300 million

...- The Chapter 11 plan of Garrett Motion Inc. (GMI) and its affiliated debtors, sponsored by the new main shareholders Oaktree Capital Management L.P. (23.2% voting rights) and Centerbridge Partners L.P. (23% voting rights) was implemented with no major deviation. - We forecast S&P Global Ratings-adjusted debt to EBITDA of about 7.2x-7.5x in 2021 and 6.0x-6.2x in 2022--about 4.5x-4.7x and 3.8x-4.0x, respectively, excluding approximately $1.3 billion of convertible series A preferred stock (preference shares A), which we view as debt-like under our criteria, although we acknowledge it has certain equity characteristics. - We assigned a long-term 'B+' issuer credit rating to GMI and a 'B+' issue rating to the seven-year $1.25 billion senior secured term loan B (TLB) and the five-year $300 million revolving credit facilities (RCFs). The recovery rating of '3' indicates meaningful recovery prospects (50%-70%; rounded estimate: 60%) at default. - The stable outlook reflects our view that GMI...

Research Update