General Motors Co, the largest US automaker, is in early stages of talks with banks about expanding its credit line by as much as US$5 billion, a person familiar with the discussions said.
GM, based in Detroit, may seek US$4 billion to US$5 billion in additional revolving credit from some of the lenders that provided its current line of credit, said the person. GM declined to comment.
The automaker has “substantial cash requirements going forward,” including pension obligations and reinvesting in operations, according to an Aug. 3 regulatory filing. GM had US$32.6 billion in cash and marketable securities on hand on June 30. It also has a US$5 billion revolving credit line that was set up in October 2010, according to the filing.
“While we do not believe that we will draw on the secured revolving credit facility to fund operating activities, the facility provides additional liquidity and financing flexibility,” GM said in the filing.
The company was revamped in a government-backed bankruptcy in 2009.
Last year GM took back the title of the world’s top seller of cars and light trucks from Toyota Motor Corp.
Chief executive officer Dan Akerson faces a slide in GM’s share of its home market to 18 percent through last month from 20 percent a year earlier.
Akerson also wants to end losses in Europe that have totaled US$16.8 billion since 1999.
The negotiations about the new credit were reported on Friday by the Wall Street Journal, which cited people with knowledge of the discussions it did not identify. The Journal also said GM had not made an official request to banks.
Also on Friday, GM’s issuer default rating was raised by Fitch Ratings to “BB+,” the highest non-investment level, from “BB.”
The change reflects GM’s “continued positive free cash flow generating capability” and “very low leverage,” Fitch said in a statement.
GM slipped 0.7 percent to US$21.18 yesterday at the close in New York.
The automaker has slid 36 percent since its November 2010 initial public offering. The US government still holds a 32 percent stake in the company.
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