GTX - Garrett Motion

[hillfronter83]

19 hours ago, writser said:

  

It's an interesting way too look at the situation. The series A prefs are senior to the common, they yield 11% and you are aligned with the big boys (who all signed up for the prefs). Unless Garrett is flipped immediately to another buyer I'd say I 'd rather keep my common and pay up for the pref in your example.

But yeah, common traded as low as ~$4.50 the past few days and you could certainly argue that selling your common for $6.25 and buying some back much lower is a valid alternative to holding on to your position just to get the prefs. It's difficult to make sense of the pricing the past few months.

Perhaps the correct answer is that you should do both, get the prefs AND buy in the open market  .

I think premium for series A preferred over common makes more sense in the bear case scenario due to seniority and PIK coupon. Because of likely automatic conversion in 2 years, the premium will likely disappear if common trades close to BAW multiple.

But you can't do both since you can't tender and subscribe for preferred. As wabuffo pointed out, there is very thin liquidity and shareholders only have the option to tender at $6.25 if they tender the whole position. So this buy and tender option is only available for small fishes. At $4.5/share, it's almost a no brainer since you are basically buying common at close to 50% discount to preferred. At $5.2, the discount is 20% so about two years of coupon payment.

[gfp]

Most involved in these rights are probably well aware of this, but just a heads up for anyone who hasn't singed and submitted all of the required forms to participate.  At least at Interactive Brokers it is not enough to simply make your election in the corporate actions center - you need to submit all of the signed paperwork as well.

Example communication from IB this morning:

"Failure to submit the completed forms or fund your account for the exercise cost will result in an invalid election, and IBKR will not be able to process your request.  



The deadline to participate in the offer will be 2021-04-13 @ 13:00 (America/New_York). "

[udravi]

I do not understand what forms are they refering to?

[Libs]

I had to fill in forms through the advisor channel AND as a client. Pretty tricky and cumbersome IMO.

[hasilp89]

probably different based on what brokerage you use (i use fidelity) but have two separate debits pending for my accredited and 1145 rights subscriptions.

 

[brker_guy]

Did any of you guys' brokers required you to fill out an IRA Distribution Form if these shares are held in a retirement account like an IRA?

I have shares held in IRA accounts at TDAmeritrade and Fidelity.  TD forced me to fill out an IRA Distribution form while Fidelity didn't even ask me to. 

Can someone share some insights into this?

[hasilp89]

I’m not certain as I do not hold this in an IRA account. Don’t quote me but I feel like  I remember reading somewhere (on this board, Twitter, or filings) that the rights would be considered a distribution from an tax-advantaged account. I would call fidelity and ask them to confirm.

[benhacker]

Fidelity said explicitly to me that this would *not* be an IRA distribution.

[brker_guy]

Thank you!  That's what I understood too because I held my shares at Fidelity and TD.  TD is so crooked!  Schwab can't gobble them fast enough and end their miseries. 

[hasilp89]

Anyone else receive the questionnaire for accredited investors from kllc? My understanding is that the A shares issued in the accredited rights offering are subject to regulations requiring them to be registered with the SEC before being traded. By signing and completing Annex A/B I’m saying I’d like to register my A shares for resale (subject to 144a rules). It seems like pretty standard stuff but wanted to see if I was missing something (I’m paranoid the backstop parties are trying to get my rights).

[wabuffo]

It seems like pretty standard stuff but wanted to see if I was missing something (I’m paranoid the backstop parties are trying to get my rights).

I don't think you are missing anything.  I think its actually great news because it means that at some point there could be a trading market for our Series A preferreds.   I haven't actually started to fill out the forms yet but will probably try to finish them this week.

wabuffo

[hasilp89]

Thank you! Yeah I’m pretty sure I remember IR mentioning that their intention was to have them trade. And if they do I’m pretty confident it will be above par...

Had not seen it announced very well but call at 8:30am this morning. Link on website.

[AG]

The new forms are a bit confusing. I was wondering is someone can provide some feedback about the following sections:

"B. Securities to be Included in the Registration Statement. Please state the number of Series A Shares and/or shares of Common Stock which are Registrable Securities and which you wish to have included in the Registration Statement."

Do I need to register/should I include here just the preferred shares from the subscription of accredited investor rights or also those from the 1145 shares and my common shares?

 

"Item 8. Plan of Distribution. Please indicate the method(s) of distribution you may use to dispose of your Registrable Securities:"

Presumably the last option "[ ] a combination of any such methods of sale." is a valid and the most flexible answer to that question? 

[Ismael]

On 4/30/2021 at 10:43 AM, AG said:

The new forms are a bit confusing. I was wondering is someone can provide some feedback about the following sections:

"B. Securities to be Included in the Registration Statement. Please state the number of Series A Shares and/or shares of Common Stock which are Registrable Securities and which you wish to have included in the Registration Statement."

Do I need to register/should I include here just the preferred shares from the subscription of accredited investor rights or also those from the 1145 shares and my common shares?

 

"Item 8. Plan of Distribution. Please indicate the method(s) of distribution you may use to dispose of your Registrable Securities:"

Presumably the last option "[ ] a combination of any such methods of sale." is a valid and the most flexible answer to that question? 

I think it was page 7 or 10 of the subscription rights form that stated you don't need to register the 1145 shares to sell them so long as you aren't an underwriter.  Apparently 1145 is a section of bankruptcy code.

 

Not sure if there is any downside to picking the last option.  

[AG]

On 5/3/2021 at 1:47 AM, Ismael said:

I think it was page 7 or 10 of the subscription rights form that stated you don't need to register the 1145 shares to sell them so long as you aren't an underwriter.  Apparently 1145 is a section of bankruptcy code.

 

Not sure if there is any downside to picking the last option.  

Thank you

[hasilp89]

Any one familiar with the DTC Eligibility of the Accredited Pref A Shares and how that all works? Saw that the cusip and $ were removed from my account yesterday. Talking to fidelity these are not DTC eligible and therefore they can't be held in a brokerage account. However it sounds like the company is working to make them eligible. 

[wabuffo]

The Accredited Investor preferreds (AI) can't trade and won't be held at your broker (they will be held in book-entry form).  The 1145 preferreds should be held at your broker and will trade at some point in the near-term.  If you registered your AI shares, then GTX will at some point also make these shares tradeable as well.  Not sure how that will work exactly.

I could be wrong - we'll know by next week, I think, how this will all shake out.   It's unfortunately one of the most complex rights offerings I have ever been part of.

wabuffo

 

 

[hasilp89]

Thanks Wabuffo. That makes sense. My first and most complex rights offering.

[hillfronter83]

5 hours ago, wabuffo said:

The Accredited Investor preferreds (AI) can't trade and won't be held at your broker (they will be held in book-entry form).  The 1145 preferreds should be held at your broker and will trade at some point in the near-term.  If you registered your AI shares, then GTX will at some point also make these shares tradeable as well.  Not sure how that will work exactly.

I could be wrong - we'll know by next week, I think, how this will all shake out.   It's unfortunately one of the most complex rights offerings I have ever been part of.

wabuffo

 

 

After GTXMQ.TEN3 showing in my account for a few days, yesterday IB informed me that the company rejected my AI participation and returned my cash. They haven't given me a reason yet. These thieves are trying really hard to keep as much preferred for themselves.

[hasilp89]

9 hours ago, hillfronter83 said:

After GTXMQ.TEN3 showing in my account for a few days, yesterday IB informed me that the company rejected my AI participation and returned my cash. They haven't given me a reason yet. These thieves are trying really hard to keep as much preferred for themselves.

Wow that is annoying. Did you provide all the initial documentation due by the 15th? And then also the registration documents that are technically due by today?

[hillfronter83]

4 hours ago, hasilp89 said:

Wow that is annoying. Did you provide all the initial documentation due by the 15th? And then also the registration documents that are technically due by today?

Yes, initial documents were sent on time and IB told it seemed fine. But I didn't receive any additional registration documents. Not sure how the additional documents will effect the participation rights. I'll see what IB comes back with the reason for rejection.

[hasilp89]

http://archive.fast-edgar.com/20210511/ATZZT22CZ222CJZZ2V2K2ZZZ8I8LZZV8ZH32/

 

not sure if I'm reading it right but is this saying that Baupost has sold some of it's preferred A Shares? Would that be a private market deal / is that even possible if they aren't registered yet?

[bolo]

I had the same problem with IB--everything was in on time, they told me everything was fine, the money was removed my account, but the company ultimately rejected my AI participation and returned my cash. I don't know if it's thieves at the company or the usual IB incompetence/lack of customer service.

[Ismael]

Does anyone know if the accredited investor preferred conversion to common is 1:1? (the link to the offer info is no longer active).  Thanks!

[hasilp89]

17 hours ago, Ismael said:

Does anyone know if the accredited investor preferred conversion to common is 1:1? (the link to the offer info is no longer active).  Thanks!

I haven’t seen anything that indicates otherwise.