GM Plans to Increase Credit Line image

GM is in talks with banks to double its $5 billion credit as it plans to shrink pension obligations and strengthen its balance sheet.

GM, the world’s largest car maker by sales, is no longer in the danger of running out of money, as the company had at the end of June $33 billion in available cash and analysts believe that it only needs $20 billion to operate comfortably. GM’s current available credit line is $5 billion. The company still needs money as the European crisis continues to cause losses, the auto maker invests more and more on new vehicles, and it also plans to buy back its shares purchased by the US Treasury and to reduce its U.S. pension obligations.

Currently the automaker is in early talks with the banks that already offered the 2010 line of credit. GM plans to raise its credit line by $4-$5 billion and extend the dead-line beyond 2015. It hopes to close a deal in the following 6-9 months and to involve other banks beyond those that are already part of the deal. It is very possible that the automaker won’t go on with its plan since it hasn’t yet put out an official request to banks.