General Motors has announced that it has launched an offering of senior unsecured fixed rate notes. The proceeds from the notes – priced at a total of $4.0 billion USD – are intended to bolster GM cash reserves “to aid in general corporate purposes.”
The GM senior unsecured notes break down as follows:
- $1.0 billion of 5.40 percent notes due in 2023
- $2.0 billion of 6.125 percent notes due in 2025
- $1.0 billion of 6.80 percent notes due in 2027
At the time of their announcement, GM stated that it expects the offering to settle on Tuesday, May 12th, 2020.
GM’s issuing of the $4 billion in notes comes on the heels of several other actions to bolster its balance sheet and available credit. In late April, the Detroit-based automaker extended its $4 billion, 3-year credit line by $3.6 billion.
Prior to that, in late March, GM drew down $16 billion from its available credit lines, at the time totaling $16.5 billion. The automaker also extended its $2 billion, 364-day revolving credit line to April 2021, with that extension reserved exclusively for GM Financial, General Motors’ captive finance arm.
These actions all take place as GM vehicle production remains idled in North America as a result of the COVID-19 pandemic. The circumstance puts GM – along with its rivals – in a precarious financial position. During this time, the automaker has taken various austerity measures, including suspending its quarterly cash dividend on common stock, suspending its share repurchase program and has also “taken other significant austerity measures to preserve near-term available cash,” such as deferring payments to employees. Luckily, GM production will restart on May 18th.
Most recently, GM reported a profit for the first quarter 2020. It was the only American automaker to do so, as Ford and FCA posted significant, billion-dollar losses.