GM secures $6B line of credit as UAW strike continues
General Motors (NYSE: GM) announced Wednesday morning the procurement of a fresh $6 billion line of credit and disclosed that the financial impact of the United Auto Workers (UAW) strike in the 3Q amounted to $200 million, according to a company representative.
The strike, which began on September 15th and has now entered its 20th day, has been primarily directed at the Detroit Three automakers.
The union has initiated strikes at two GM assembly plants and 20 parts distribution centers. However, if contract negotiations continue to stall, the UAW may decide to call for additional walkouts.
Given this uncertain situation, GM has taken proactive measures by securing a fresh $6 billion line of credit, extending until October 2024. P Morgan and Citibank are jointly leading the arrangement of this credit facility.
The acquired credit should help to strengthen the automaker’s financial position in the face of a potentially prolonged strike.
To secure this added liquidity, GM must adhere to certain financial conditions, including maintaining a minimum of $4 billion in global liquidity and at least $2 billion in U.S. liquidity. The terms of the credit agreement also impose restrictions on GM, such as prohibiting mergers or asset sales and placing limitations on the incurrence of additional debt.
In August, GM competitor, Ford (NYSE: F), also obtained a new $4 billion line of credit.
Shares of GM are down 0.47% in mid-day trading on Wednesday.
By Michael Elkins | [email protected]