GM draws down $16 billion in credit amid coronavirus uncertainty
Detroit — General Motors Co. plans to draw down about $16 billion from its revolving credit facilities to increase its cash position and maintain financial flexibility during the current uncertainty in global markets caused by the coronavirus, the automaker said Tuesday.
GM's announcement comes after the automaker moved to shut down all of its North American manufacturing plants as the virus continues its spread, and as the U.S. and state governments work to contain it with some states — including Michigan — enforcing a stay-at-home executive order.
The virus has caused the financial markets to plunge and led to much uncertainty for businesses. Like crosstown rival Ford Motor Co., GM now is suspending its 2020 guidance because of the uncertainty around the business impact of the global pandemic.
The $16 billion in funds will add to the company’s cash position of about $15 billion to $16 billion expected at the end of March. Additionally, GM Financial, GM's financial services arm, "has strong liquidity and capitalization," the automaker said.
GM Financial had $24 billion of liquidity at the end of 2019 and expects to end the first quarter with similar levels of liquidity. Its liquidity level is targeted to support at least six months of cash needs.
“We are aggressively pursuing austerity measures to preserve cash and are taking necessary steps in this changing and uncertain environment to manage our liquidity, ensure the ongoing viability of our operations and protect our customers and stakeholders,” GM CEO Mary Barra said in a statement.