NEW YORK (LPC) – Basic Motors Co (GM) will search to increase maturities on US$6bn in revolving loans relatively than refinance a US$16.5bn credit score facility following discussions with its financial institution group throughout an unprecedented well being disaster within the US.
The corporate initially went out to its JP Morgan and Citigroup-led financial institution group in early March requesting to push maturities on the US$16.5bn in revolving credit score amenities as a part of its regular-way legal responsibility administration operations.
The transaction was meant to roll over maturities, however go away pricing unchanged, a number of sources accustomed to the discussions stated.
However GM’s determination to refinance got here at a time when the corporate is going through an extended than anticipated shutdown of its crops and appreciable income losses amid a disaster of extraordinary magnitude that has created a enjoying discipline a lot completely different from when it final underwent refinancing discussions in 2019.
Complicating negotiations additional, the corporate determined to attract down US$16bn on its revolver on March 27 whereas the refinancing talks with its financial institution group have been going down.
“To shore up liquidity and strengthen its monetary place as a consequence of world market uncertainty from the coronavirus pandemic,” the corporate stated on March 24 about its plans to attract down the ability.
The initially proposed refinancing included a US$2bn 364-day mortgage and a US$4bn three-year mortgage. It additionally included a US$10.5bn, five-year facility, stated a number of sources accustomed to the unique refinancing discussions.
The brand new plan is predicted to solely handle the short-term maturities, together with the US$2bn one-year mortgage, and the US$4bn three-year mortgage, the sources stated.
The one-year mortgage is seeking to pay 25bp undrawn, whereas the three-year mortgage could pay 40bp undrawn.
When absolutely drawn, the loans may pay 175bp over Libor, the sources accustomed to the transaction stated.
An choice to convert the one-year revolving credit score right into a time period mortgage after one 12 months can also be anticipated to be eliminated, the sources stated.
GM’s 364-day mortgage at present pays 12.5bp undrawn, the three-year pays 15bp undrawn.
The drawn margin on the 2 amenities is 125bp over Libor.
The brand new refinancing plan will go away in place the US$10.5bn credit score facility. Pricing on the five-year is predicted to remain unchanged at 125bp over Libor and 17.5bp undrawn.
Commitments are due April 10.
GM additionally has a US$3bn revolving credit score it entered into in January 2019 when it refinanced the opposite three tranches. The brand new mortgage elevated the corporate’s borrowing capability to US$19.5bn.
A Citigroup spokesperson declined to remark. Spokespeople for GM and JP Morgan didn’t instantly return requests for remark.
(Reporting by Michelle Sierra; Enhancing by Kristen Haunss)