General Motors obtained an $11 billion revolving credit facility and thus managed to double its financial cushion and strengthen its balance sheet.
The additional liquidity is welcome as GM is trying to stop losses at its European subsidiary Opel. Last week GM announced plans to break even in Europe by the middle of the decade. The new credit facility replaces a $5 billion line the company secured more than two years ago shortly before its initial public offering in November 2010.
GM said in a statement that the $11 billion facility offers better terms and the ability to borrow in currencies other than the U.S. dollar. “The new revolver provides a significant source of backup liquidity and financial flexibility, further bolstering our fortress balance sheet,” said GM chief financial officer Dan Ammann.
The deal gives GM a credit facility comparable to those of other companies close to its size, GM spokesman Dave Roman said. Ford, for instance, had its credit facility boosted to $9.3 billion earlier this year.
The new credit line consists of a $5.5 billion three-year facility and another $5.5 billion that matures in November 2017. Its earlier $5 billion facility would have matured in 2015. The deal also allows GM Financial to borrow under the facility.