real-time news and commentary for investors
Tuesday, Sep 24
GM to clean its financial house after debt placement raises $4.5B
- General Motors (GM) says it will act to lower its cost of capital and strengthen its balance sheet after raising $4.5B through its first major private sale of debt since its emergence from bankruptcy.
- GM plans to spend $3.2B of the proceeds generated from the placement of three series of senior unsecured notes to repurchase 120M of preferred shares held by the United Auto Workers union retiree healthcare trust; it will use another $1.2B to prepay in full, its 7% notes held by the Canadian Auto Workers' Union Health Care Trust.
- Both transactions are expected to be accretive to GM's 2014 earnings by ~$152M, or $0.11/share, but GM will take an $800M charge in Q3 associated with the repurchase of preferred shares.