General Motors has greatly increased its ability to borrow money by procuring an unsecured $12.5 billion revolving credit line earlier today.
The new credit facility, which amends and extends GM’s existing $11 billion credit facility, consists of two independent elements: a $5 billion three-year facility and a $7.5 billion five-year facility.
“This credit facility further strengthens our fortress balance sheet with an appropriate level of liquidity to support the needs of the business,” said Chuck Stevens, GM executive vice president and chief financial officer. “The broad support from our global banking partners is important as we continue to target a capital structure that is consistent with strong investment grade ratings.”
Besides the expanded amount that GM can now borrow for its needs, the facility offers improved pricing and terms, as well as the ability to borrow in currencies other than U.S. dollars. And unlike with previous facilities, GM’s captive finance arm, GM Financial, will also be able to borrow under the facility.
The General says that the transaction is the result of a total of 40 financial institutions from 14 countries, an element that underscores the global scope of the automaker’s operations.
Businesses often acquire credit lines in order to have enough capital for a wide variety of scenarios, such as unforeseen expenditures, investments, or other business-impacting events. Even so, we’re curious to see how GM utilizes the credit lines… if it does at all.