GM Seeks Billions in Credit for Life After Uncle Sam
General Motors Co. is in talks with major banks to set up a $5 billion line of credit as it works to convince potential investors it can function without government support, people familiar with the situation told The Wall Street Journal.
The bank talks come as GM nears an initial public offering of shares, which could come in the fourth quarter. The carmaker is on an all-out campaign to pitch itself as a reinvented company capable of delivering sustainable profits.
A revolving credit facility, which allows a company to borrow for any reason, would bolster GM's balance sheet and provide a financial cushion should the company's recovery plans hit a snag. A stock sale would allow the U.S. government, GM's biggest shareholder, to begin reducing its about 61% stake in the Detroit auto maker.
Finance chief Chris Liddell this week told a gathering of potential investors and auto analysts that the company aims to eliminate all debt and achieve an investment-grade credit rating. He didn't provide a time frame. He said GM has about $42.2 billion in outstanding debt and pension liabilities.
The goal of holding little or no debt is an unfamiliar one for GM or for any of the Detroit auto makers, which historically have carried hefty debt loads. Ford, for instance, is expected to report it had $27 billion in debt at the end of June. It also has about $12 billion in unfunded pension obligations.
GM is in talks with several major banks on the revolving credit, including Morgan Stanley and JPMorgan Chase & Co., both of which have been tapped for lead roles in the auto maker's stock sale.
GM was burning more than $1 billion in cash a month before filing for bankruptcy in June 2009. In this year's first quarter, GM produced a $1.2 billion operating profit and generated $1 billion in free cash flow.
After nearly running out of cash last year, GM ended the first quarter with $35.7 billion in cash and marketable securities, much of it supplied by the U.S. and Canadian governments in exchange for equity in the company.
More Industry

Pennsylvania Dealership Under New Retailers
The sale of the Chrysler Dodge Jeep Ram store puts a family auto group on a leaner path as first-time dealers take the helm.
Read More →
Battery Storage Takes Priority Over EVs
U.S. automakers are prioritizing battery energy stationary storage over electric-vehicle production as the consumer demand for EVs lags the rest of the world.
Read More →
Auto Dealers Feel Better But Not Great
A second-quarter Cox Automotive poll of franchised retailers and independents found better views of the current market after a good spring but anticipation of third-quarter storminess.
Read More →
New-Vehicle Sales Picture Relative
A May forecast is complicated by last spring’s trade tariff effects on auto retail. Despite continued hard realities, many consumers took advantage of ways to bite the bullet.
Read More →
Auto Group Acquires Third Nissan Rooftop
Iowa-based Coleman Automotive Group recently acquired its seventh dealership, McGrath Nissan, which it renamed Nissan of Elgin.
Read More →
April Less Affordable
Based on prices, reduced incentives and slower household income growth, consumers found it more challenging to buy new last month, Cox Automotive reported.
Read More →
Building an Extraordinary F&I Agency
Work to determine your specialized talent, because that fact will determine everything about your agency’s future.
Read More →
Recipe for Compliance
The secret to both amazing barbecue and compliance is the same: understanding the basics and committing to a process.
Read More →
EVs Getting More Attractive
A growing percentage of U.S. consumers are open to switching and fewer are adverse to the idea, according to a recently completed survey. That’s despite the end of a tax break.
Read More →
EV Sales Drop in April Following Surge
North American electric-vehicle sales were down 28% year-over-year, a sharp contrast from global EV sales growth of 6%.
Read More →