8-KMaterial AgreementsFinancial EventsExhibits & Filings

General Motors Co 8-K Report, Material Agreement (Jan 14, 2019)

Filed January 14, 2019For Securities:GM

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.

Frequently Asked Questions

The primary purpose of this $3.0 billion 3-Year Revolving Credit Agreement is to provide General Motors with financial flexibility and liquidity. It serves as a backstop facility to ensure access to funds if needed for operational needs or other corporate purposes.

GM must maintain a minimum of $4.0 billion in global liquidity and $2.0 billion in U.S. liquidity. Additionally, the agreement contains typical restrictions on mergers, sales of assets, and secured debt borrowings, subject to certain exceptions.

If GM fails to maintain an investment-grade corporate rating from at least two of the specified credit rating agencies (Fitch, Moody's, S&P), certain of its domestic subsidiaries will be required to guarantee GM's obligations under this credit facility. This is a significant contingency that could impact the perceived risk of the facility.

The interest rates are variable and will be based on either prevailing annual Eurodollar loan rates or an alternative base rate. An applicable margin will be added, which is determined by the credit rating assigned to the facility or GM's senior unsecured long-term indebtedness.