ROLLE, Switzerland - Garrett Motion Inc. (NASDAQ:GTX), a global technology leader in the automotive sector, has announced the pricing of a private offering of senior unsecured notes, which is set to raise $800 million. The offering is expected to close around May 21, 2024, subject to standard closing conditions.
These 7.750% senior notes, due in 2032, will be issued by Garrett Motion Holdings Inc. and Garrett LX I S.à r.l., its wholly owned subsidiaries. The amount offered was increased from an initially planned $500 million, reflecting strong investor interest. The notes will be sold at par plus any accrued interest since May 21, 2024.
Garrett Motion plans to use the proceeds from this offering, along with its available cash, to repay approximately $800 million of its existing credit facility debt. This move is in line with the company's financial strategy and terms of its credit agreements. The notes will be guaranteed by the company's wholly owned subsidiaries that also guarantee its senior secured credit facilities.
This debt offering is exempt from the registration requirements under the Securities Act of 1933. As such, the notes will be available only to qualified institutional buyers and certain non-U.S. persons in compliance with Rule 144A and Regulation S, respectively. Garrett Motion has stated that these notes will not be offered or sold in any jurisdiction where such activity would be unlawful without proper registration or exemptions.
Garrett Motion, with a history spanning over 70 years, is known for its innovative automotive technologies, including turbochargers and electric compressors for internal combustion and hybrid powertrains, as well as systems for zero-emission vehicles. The company operates globally, with a significant presence in research and development, manufacturing, and a workforce of approximately 9,300 employees.
InvestingPro Insights
As Garrett Motion Inc. (NASDAQ:GTX) positions itself for financial optimization through its latest private offering of senior unsecured notes, the market is watching closely. According to InvestingPro, the company's management has been actively engaging in share buybacks, signaling confidence in the firm's value and future. This aligns with the company's strategic financial maneuvers, including the debt offering intended to repay existing credit facility debt.
InvestingPro Data indicates a substantial market capitalization of $2.11 billion for Garrett Motion, suggesting a solid presence in the industry. Despite a high earnings multiple with a P/E ratio of 322.93, analysts remain optimistic, anticipating net income growth this year. This optimism is further supported by the company's profitability over the last twelve months as of Q1 2024, with a gross profit margin of 19.29% and an operating income margin of 12.82%. However, revenue growth showed a slight quarterly contraction of -5.67% in Q1 2024, which investors may want to monitor in the context of the company's overall growth trajectory.
InvestingPro Tips highlight that Garrett Motion does not pay a dividend to shareholders, which could be a consideration for income-focused investors. Nonetheless, the company's stock has experienced a significant 6-month price total return of 25.0% as of the given date, reflecting positive market sentiment. For those interested in a deeper dive into the company's financials and further strategic insights, InvestingPro offers additional tips on its platform. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable insights.
With a fair value estimate by analysts at $14 and InvestingPro's fair value at $11.15, Garrett Motion's current and potential investors have a range of data points to consider when evaluating the company's notes offering and overall investment potential. For those looking to explore beyond the surface, there are 5 more InvestingPro Tips available, providing a comprehensive analysis of Garrett Motion's financial health and market position.
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