General Motors Seeks Further $2B Loan, Earnings Out Today- Report


General Motors (GM) is negotiating with banks for a fresh $2 billion loan, people familiar with the matter told Bloomberg. According to the report, GM is looking for ways “to increase liquidity as it deals with a continuing slump in consumer demand caused by the coronavirus pandemic.”

The sources say the loan will be structured as a 364-day revolving credit facility, and pricing on the loan is at LIBOR +250 bps.

“During these times of uncertainty, we continue to evaluate various options to enhance liquidity and will act prudently,” a GM spokesperson told Bloomberg.

At the end of March GM announced plans to draw down ~$16bn from its revolving credit facility to bolster its cash position in the face of global uncertainty.

This was followed on April 27 by additional steps to fortify the balance sheet including suspending its dividend and suspending share buybacks.

The troubled carmaker also extended $3.6bn under its three-year revolving credit agreement to April 2022. This is in addition to the extension of the $2bn 364-day revolving credit agreement to April 2021 that GM and GM Financial renewed earlier last month.

GM is set to report its first-quarter earnings results today before market open. Going into the print, the Street is expecting EPS of $0.34 (-75.9% Y/Y) and revenue of $31.37B (-10.1% Y/Y).

Analysts have a cautiously optimistic Moderate Buy outlook on the stock, with 8 recent buy ratings vs 3 hold ratings and 1 sell rating. And with shares down 42% year-to-date, the $31 average analyst price target of indicates upside potential of 48%. (See General Motor’s stock analysis on TipRanks).

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