GM locks in $6 billion credit line as strike costs rise
By Joseph White
(Reuters) — General Motors (NYSE:GM) on Wednesday secured a new $6 billion line of credit and estimated that the cost of the United Auto Workers strike was $200 million during the third quarter, a company spokesman said.
The targeted strike against the Detroit Three automakers began on Sept. 15 and is now in its 20th day.
The union has struck two GM assembly plants and 20 parts distribution centers. But the UAW could order walkouts at more GM factories over the coming weeks if contract negotiations remain stalled, sharply escalating the automaker's losses.
Against that backdrop, GM said in a securities filing that it has locked in a new, $6-billion line of credit through October 2024. JP Morgan and Citibank are listed as joint lead arrangers for the deal.
The new line of credit will bolster GM's balance sheet against a protracted strike that could widen to cut off production of its most profitable vehicles — large Chevrolet and GMC pickup trucks and large SUVs such as the GMC Yukon and Cadillac Escalade.
The additional liquidity will require GM to maintain at least $4 billion in global liquidity and $2 billion in U.S. liquidity. The terms of the credit agreement also restrict GM from mergers or sales of assets and limits on other, new debt.
Rival Ford Motor (NYSE:F) secured a new $4 billion line of credit in August.
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