Summary
General Motors Company (GM) announced on January 14, 2019, the execution of a new $3.0 billion 3-Year Revolving Credit Agreement. This facility provides GM with significant liquidity, although it will automatically decrease to $2.0 billion after 18 months. The agreement includes standard covenants typical of such credit facilities, such as restrictions on mergers, asset sales, and secured debt, alongside requirements for GM to maintain minimum global and U.S. liquidity levels of $4.0 billion and $2.0 billion, respectively. An important condition for GM is the maintenance of an investment-grade corporate rating from at least two major credit rating agencies. Failure to do so will trigger a requirement for GM's domestic subsidiaries to guarantee the obligations under the credit facility. The interest rates are variable, tied to Eurodollar or alternative base rates plus an applicable margin determined by GM's credit rating. This filing is crucial for investors to understand GM's ongoing access to capital and its financial flexibility.
Key Highlights
- 1GM entered into a $3.0 billion 3-Year Revolving Credit Agreement on January 14, 2019.
- 2The credit facility is exclusively for GM and denominated in U.S. Dollars.
- 3The facility's borrowing capacity automatically reduces to $2.0 billion after 18 months.
- 4GM must maintain at least $4.0 billion in global liquidity and $2.0 billion in U.S. liquidity.
- 5A downgrade below investment grade by two major rating agencies will require GM's domestic subsidiaries to guarantee the debt.
- 6The agreement includes typical covenants restricting mergers, asset sales, and secured debt.
- 7Interest rates are variable, dependent on Eurodollar/alternative base rates and GM's credit rating.