8-KMaterial AgreementsFinancial EventsShareholder Matters+3

GENERAL ELECTRIC CO 8-K Report, Material Agreement (Dec 3, 2015)

Filed December 3, 2015For Securities:GE

Summary

This Form 8-K filing from General Electric Company (GE) on December 3, 2015, details the completion of a significant reorganization of its financial services arm, GE Capital Corporation (GECC), as part of the broader GE Capital Exit Plan announced earlier in 2015. The Reorganization effectively separates GECC's U.S. and international operations, with GE Capital International Holdings becoming a U.K.-based entity supervised by the U.K. Prudential Regulation Authority, and GE Capital US Holdings consolidating U.S. operations under a new U.S. holding company. A key transaction was the merger of GECC into GE itself, resulting in GE directly assuming GECC's outstanding debt obligations. This move is intended to streamline GE's structure and allow it to focus on its core industrial businesses. Furthermore, GE has issued new preferred stock to holders of GECC preferred stock, approximating $5.9 billion in liquidation preference. These new preferred stock series (A, B, and C) rank senior to common stock but have limited voting rights, primarily triggered by dividend payment failures. The company has also entered into supplemental indentures to formalize its assumption of approximately $67.5 billion in GECC's U.S. medium-term note program debt and approximately $55.2 billion under GE Capital European medium-term note programs. This filing marks a crucial step in GE's strategic shift away from extensive financial services activities.

Key Highlights

  • 1GE completed the reorganization of GE Capital Corporation (GECC) as part of its GE Capital Exit Plan, aiming to reduce its financial services footprint.
  • 2GECC's U.S. and international operations were separated into distinct holding companies: GE Capital US Holdings and GE Capital International Holdings (U.K.-based).
  • 3GECC merged with and into GE, with GE directly assuming all of GECC's outstanding debt obligations.
  • 4GE assumed approximately $67.5 billion in GECC's U.S. medium-term note program debt and $55.2 billion in GE Capital European medium-term note program debt.
  • 5GE issued new preferred stock with an approximate liquidation preference of $5.9 billion to former GECC preferred stockholders.
  • 6The new GE preferred stock (Series A, B, and C) ranks senior to common stock but has limited voting rights and no maturity date.
  • 7GECC will cease reporting under the Securities Exchange Act of 1934, while GE will continue its reporting obligations.

Frequently Asked Questions

The primary purpose is to execute GE's plan to significantly reduce the size of its financial services businesses (GE Capital) and to refocus on its core industrial operations. This involves separating and restructuring GECC's operations and having GE directly assume its debt.

GE has directly assumed approximately $122.7 billion in outstanding debt obligations previously held by GECC. This represents a significant increase in GE's direct liabilities, although it is part of a strategic plan to exit financial services.

Holders of GECC preferred stock received newly issued preferred stock from GE itself, with an aggregate liquidation preference of approximately $5.9 billion. These new GE preferred stock series (A, B, and C) are perpetual, rank senior to GE's common stock, but have limited voting rights and specific redemption provisions.

GE Capital Corporation (GECC) will cease to report under the Securities Exchange Act of 1934. General Electric Company (GE) will continue its reporting obligations as the parent entity that has now assumed GECC's debt and operations.