General Motors draws out cash
Sunday, 21 September 2008

AFP, DETROIT, Michigan - General Motors said that it intended to draw down the remaining 3.5 billion dollars of its 4.5-billion-dollar secured revolving credit facility to maintain what the auto giant described as "high level of financial flexibility" at a time when the financial markets are uncertain.

"Accessing the funds available to us is a prudent liquidity measure. Drawing on the revolver now improves our liquidity position at a time when the capital markets have become more challenging," GM Treasurer Walter Borst said Friday.
"The revolver draw will bolster the company's liquidity position," Borst said.
Borst said the proceeds from the draw would also be available to be used to retire 750 million dollars of debt maturities coming due in October, and to pay Delphi Corporation in excess of 1.2 billion dollars as part of its reorganization efforts, assuming court approval of the revised agreements between GM and Delphi that were filed with the court earlier this month.
The US Pension Benefit Guarantee Corporation had demanded that bankrupt the Delphi Corp come up with 1.2 billion to cover pension liabilities by the end of September.
Delphi, which is based in Troy, Michigan, filed for bankruptcy and has solicited more than 11 billion dollars in financial assistance from GM, which originally spun of the company in 1999.
GM secured the 4.5-billon-dollar revolving credit facility in July 2006 from a consortium of banks and provides liquidity that GM can draw on from time to time to fund working capital and other needs.
At the time, GM executives had said they doubted they would need to draw on the facility.
However, car and truck in the United States have dropped sharply this year and are not expected to recover until 2009 at the earliest and GM reported slender cash reserves of approximately 16 billion dollars at the end of June.
The slender reserves had prompted speculation GM could be forced into bankruptcy.
In July, GM announced a plan to bolster liquidity through internal operating actions, asset sales and the capital markets.
"The internal operating elements of the plan remain on track and the company continues to look to opportunistically access the capital markets," GM said in a statement.
GM also announced the completion of a 322-million-dollar debt to equity to exchange. The amount involved in the transaction is relatively. In addition, the debenture will mature in June in less than one year.
GM also is campaigning to have the US government release 25 billion dollars in guaranteed loans that could be used to finance the development of new technology.

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