GM Draws on $4.5 Billion Revolving Credit Facility and Completes Debt to Equity Exchange
DETROIT - General Motors (NYSE: GM) announced today that it intends to draw down the remaining $3.5 billion of its $4.5 billion secured revolving credit facility to maintain a high level of financial flexibility for its ongoing restructuring during these uncertain times in the capital markets. In addition, GM announced the completion of a $322 million debt to equity exchange.
“Accessing the funds available to us is a prudent liquidity measure. Drawing on the revolver now improves our liquidity position at a time when the capital markets have become more challenging,” said GM Treasurer Walter Borst.
The revolver draw will bolster the company’s liquidity position. The proceeds from the draw would also be available to be used to retire $750 million of debt maturities coming due in October, and to pay Delphi Corporation in excess of $1.2 billion as part of its reorganization efforts, assuming court approval of the revised agreements between GM and Delphi that were filed with the court on September 12. The $4.5 billion secured revolving credit facility was put in place in July 2006 with a consortium of banks and provides liquidity that GM can draw on from time to time to fund working capital and other needs.
In July, GM announced a plan to bolster liquidity through internal operating actions, asset sales and the capital markets (see related news release). The internal operating elements of the plan remain on track and the company continues to look to opportunistically access the capital markets.
As part of its capital market activities, GM has completed a debt to equity exchange which will improve GM’s liquidity by reducing both its debt and its interest costs. GM issued 28.3 million new shares of its common stock in exchange for $322 million principal amount of its 1.5% Series D Senior Convertible Debentures, which mature in June 2009.
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