Summary
General Motors Co. (GM) filed an 8-K on April 5, 2022, to report the entry into a Fourth Amended and Restated 364-Day Revolving Credit Agreement. This agreement provides GM with access to a $2.0 billion credit facility maturing on April 4, 2023. The facility is unsecured and primarily allocated for the exclusive use of General Motors Financial Company, Inc. (GM Financial). This move signals GM's proactive approach to managing its liquidity and financial flexibility. The credit agreement includes standard covenants regarding mergers, asset sales, and secured debt, alongside maintaining minimum global and U.S. liquidity levels. The interest rate is tied to market benchmarks (Term SOFR Rate or alternative base rate) plus an applicable margin, which will fluctuate based on GM's credit rating, underscoring the importance of maintaining investment-grade status.
Key Highlights
- 1GM entered into a $2.0 billion, 364-day unsecured revolving credit facility maturing on April 4, 2023.
- 2The facility is primarily designated for use by General Motors Financial Company, Inc. (GM Financial).
- 3The agreement includes standard covenants typical for such credit facilities, such as restrictions on mergers, asset sales, and secured debt.
- 4GM is required to maintain a minimum of $4.0 billion in global liquidity and $2.0 billion in U.S. liquidity under the agreement.
- 5Interest rates are variable, based on Term SOFR Rate or an alternative base rate, plus an applicable margin tied to GM's credit rating.
- 6A provision exists requiring certain domestic subsidiaries to guarantee GM's obligations if its investment-grade corporate rating is lost from two of the three major credit rating agencies (Fitch, Moody's, S&P).