Yesterday, General Motors announced that it had clinched a new $11 billion U.S. credit line deal it had been actively seeking following the automaker’s government assisted restructuring. The new credit agreement, which is designed to finance a number of the automaker’s strategic objectives, consists of a $5.5 billion three-year facility and a $5.5 billion five-year facility. This new credit line replaces GM’s existing $5.0 billion credit facility which matures in 2015.
Upon news of the announcement, Dan Ammann, GM’s chief financial officer and senior vice president said, “the new revolver provides a significant source of backup liquidity and financial flexibility, further bolstering our balance sheet. This level of commitment from the global banking community represents a strong vote of confidence in the financial strength of our company.”
General Motors, in which the U.S. Treasury still has a stake, had been seeking access to a more substantial credit revolver, in an effort to improve its financial picture and put the automaker on par with rivals, including Ford Motor Company, which already had access to a $9.3 billion credit revolver.
The new facility offers improved pricing and terms, as well as the ability to borrow in currencies other than U.S. dollars. GM Financial, GM’s captive finance company, will also be able to borrow under the facility.
A total of 35 financial institutions from 14 countries participated in the broadly syndicated transaction, underscoring the global scope of GM’s operations. The new facility is expected to be rated investment grade by each of the major credit rating agencies, a boon for GM, since it has been working hard to jettison its junk credit status, bestowed upon the automaker in recent years by agencies such as Fitch, Moody’s and Standard & Poor.
