Auto-parts maker Garrett Motion Inc. rejected an alternative bankruptcy loan offered by Oaktree Capital Management and Centerbridge Partners, and a second one from a group of bondholders, instead selecting a revised deal from senior lenders, Bloomberg News reported. The renegotiated debtor-in-possession loan from senior lenders is a “material improvement” from the original and is the best option available, Chief Restructuring Officer Bruce Mendelsohn said yesterday in court papers. The revised terms remove certain milestones for the company in court, allow longer financing extensions and reduce certain fees. The debtor-in-possession financing must be approved in court and be supported by the majority of creditors. A hearing has been rescheduled to 10 a.m. on Thursday in New York. Garrett filed bankruptcy last week, struggling to deal with a pandemic-related slowdown in business on top of asbestos liability reimbursements it owes to its former parent Honeywell International Inc. The payments relate to asbestos claims stemming from Honeywell’s old Bendix brake business. Garrett’s initial proposed $250 million financing package was attacked by shareholders and Honeywell, in part because it contained deadlines that could rush a potential $2.1 billion sale to KPS Capital Partners. The deal had the support from holders of 61 percent of its outstanding senior secured debt but didn’t include a plan to resolve the asbestos liabilities, which sit behind other forms of debt in line for repayment.
